Friday, October 26, 2012


If any of us paid any attention at all to all the various headlines in Augusts' business sections in any newspaper in southern California, then you noticed a couple of items.  Firstly, we are grossly below seasonal averages for inventory.  In fact, many cities in Orange County are below 2 months.  The city with the largest inventory, not surprising with the high end prices, is Newport Beach, with 5 months.  Some very skeptical economist are wading into the shallow end of opinion, that housing is making a recovery.  Not only is it making a recovery, but in fact it is one of the most solid pillars of the current, albeit weak, economic recovery.  July's housing sales volume jumped 25.7% from year over year 2011 to 2012.  In fact, according to an article in the Los Angeles Times business section, home prices are highest since 2008 and posted a 2% rise in July.  According to research firm Data Quick, the region's median home price hit $306,000, reflecting that 2% rise from June and 8.1% year over year.  Supply and demand will once again factor in the region's prices.  According to Data Quick President John Walsh, "There's growing evidence prices have crept up in areas where more demand has met a shrinking number of homes for sale."  There are many positive factors for housing's comeback besides shrinking inventory.  Also fueling the market is financing, overall stable housing affordability, and pent up demand for many people who have sat out the market for years.  They are coming back in droves.  Don't expect a substantial rise in inventory any time soon.  The time for sellers and buyers to act, may just be right now.


The last complete month of data available paints a stable, if still somewhat troubled story.  The total number of sales was 2,929 for single-family resale and condominium resale.  This does not include new home sales for the month of July.  Single-family posted 1,547 equity sales, 327 short sales and 224 bank owned listings sold.  Condos had 486 full sales, 232 short sales and 113 bank owned.  Although distressed sales will be with us for the foreseeable future (at least 3-4 more years), equity sales are climbing, indicating many sellers believe the market stable enough to warrant their return.  There were 343 trustee sale auctions, with 170 being purchased at the sale by investors and 173 returning to the bank, where they will eventually become REO listings.  The total number of Notices of Default was 1,406 along with 1,008 Notices of Trustee Sale.  Both these numbers are down drastically from 2011.


1) The 6,000,000 25-34 year olds who are still living at home.  This generation scored over 65% on belief in home ownership and a desire to buy.  2) The "green" initiative.  Conserving and changing how we live in our homes will shape the next 20 years.  This is both for new construction, which will be hurrying to catch up once it starts up and also for existing home improvements.  3) The ever increasing Latino population and their belief in home ownership.  4) Baby Boomers rapidly approaching retirement with special housing needs, the need to downsize, and also their financial aid to their children to buy.  5) The new opportunity in short sales.  The banks continue to see its usefulness as a tool to reduce bad loans, and this will continue to create buying opportunities to the patient buyer.


Other than the fact that you must be patient and hang on for the roller coaster, there are many positives to buying a short sale.  But did you know there are also many positives to selling as a short sale?  Don't think that it isn't possible for you, rather arm yourself with the facts and talk to your lender.  1) Banks don't want to participate -- Nothing could be farther from the truth.  Banks know that they will save on average $50,000 per property, by selling short over the carrying costs of a bank owned listing.  2) No options to foreclosure -- Simply not true.  Many homes have had 2 or 3 postponements of trustee sales in order to allow a short sale to close.  There is also the "deed in lieu of foreclosure, that some banks will allow.   3) Short sales will cost me money out of pocket -- Definitely not true!  Not only will you have no cost to close, after submitting the proper hardship package, but in some cases the seller receives $3,000 to $25,000 from the bank at the close of escrow.  This is no guarantee, of course, as it depends on your lender and your type of loan.  4) If I go through a short sale, I cannot buy another house for a long time. -- Well, first of all, if a home is foreclosed on, the waiting period to buy again is approximately 7 years.  So you can't do any worse with a short sale.  If you have mitigating factors as to why you had to move and sell short, and you were not behind on your payments, in many cases, you can buy again, immediately.  Most short sellers are looking at between 1 and 3 years to re-enter the housing market, again depending on how badly credit was bruised and how quickly it has been repaired.

About This Blog

Short Sales and Foreclosures

More Information

  © Blogger templates Psi by 2008

Back to TOP