California Real Estate: Manhattan Beach-Beach Cities: What if the Market Doesn't Crash?

In the last eighteen months we have been bombarded almost daily by headlines or sound bytes proclaiming the demise of the California housing market. Consumers are convinced the end is near and real estate prices are going back to 1990 levels. Woe unto anyone that disagrees.. especially if you are a real estate agent. Every resident in the state has graphs to show the worst is yet to come.


Thousands are waiting for prices to drop but what if they don't. What if all the hype is just that... hype... and the market isn't about to crash and burn. Oh I know I'll be smacked down for daring to utter those words.. but nevertheless... what if the market is going through a major price adjustment and not a meltdown. What if all the foreclosures don't materialize in every city in the state? What if a lot of cities maintain some stability? What if the number of foreclosures are limited to the places that were almost entirely subprime buyers who had no money and rotten credit? What if it turns out that most folks who bought in Beverly Hills, Manhattan Beach, Newport Beach, La Jolla and Burlingame could actually afford to buy those homes?


Realtytrac is spewing foreclosure numbers faster then lightening. According to them since January 2007 there have been 172,680 foreclosure notices sent and 48,849 homes have been foreclosed in California....maybe. I took a peek at their numbers for Manhattan Beach and found one property on Ocean.. it not only shows up 9 times in their stats ... it also shows up sold... hmmmmm. Another one I really like was the Strand home built in 1990 that was foreclosed for $31,000 ... I don't think so. Wonder how many others like this are part of their hot data.


Data Quick seems to completely disagree with the figures from Realtytrac... but them I understand they are always having little skirmishes. Data Quick seems to think that there have been 100,700 notices of default sent since January and that 32,371 homes have been foreclosed. Data Quick however notes that their numbers may be off as some properties with multiple loans may show up more then once. They also note that since 1992 the average number of notices of default in CA is 34,172 per quarter. At least they seem to be showing some honesty. But then their business is not based on selling lists of foreclosures to hopeful buyers.




According to CAR there have been 282,282 closed home sales from January 1, 2007- August 31, 2007. According to Data Quick there have been 32,371 homes sold in foreclosure during the same period. Now I'm no math genius but that looks like about 11% of the homes that have sold this year and this is the worst year for real estate since the 90's. That doesn't take into account the number of homes sold say since 2005 which was the hottest sales year on record.


Now I'm not discounting the fact that there will be more foreclosures.. maybe a lot more in a number of areas but I am questioning whether the numbers are going to be catastrophic or merely very bad... and there's a big difference. Catastrophic means real economic consequences throughout the country... very bad means tough times for some but the economy stays intact.




In today's LA Times there is an article.. Giving Borrowers a Break.. that reinforces the idea that it might be smart business for lenders to modify loan terms for certain borrowers. There are a number of bills in Congress to lift Fannie Mae and Freddie Mac limits. There are three bills that Schwarzenegger will likely sign concerning the mortgage industry. None will stave off foreclosure for homeowners but they may make lenders more willing to make arrangements with buyers in trouble. I think you can expect to see more actions by lenders trying to mitigate the problems they are facing. It's not rocket science it's survival.




If many of these things go through you can expect to see the foreclosure problem become more manageable. The market will still have problems but crashes in stable cities will probably not happen. Everyone who has been waiting for the big crash in real estate values may be out of luck. You will see some big adjustments in the Inland Empire, Central Valley and Sacramento as they have a lot of problems. A lot of hopeful buyers may have to learn to live with the fact that high home prices are here to stay with some minor adjustments. Home prices won't be rising any time soon and will likely remain flat for a few years... but that big 30%-60% so many have dreamed about may remain just that... a dream.


Southern California Home Prices: Are We really in Trouble?

Manhattan Beach Home Prices: What's Happening?

Foreclosure: You Can't Always Walk Away

Manhattan Beach: Home Prices vs Income


Manhattan Beach: Are You a Bull or a Bear

Manhattan Beach-Beach Cities Real Estate: Foreclosures.. Big Trouble?