Thursday, February 12, 2009

South Bay-Beach Cities: Foreclosures January - December 2008

I was recently chastised by a reader who didn't think I was gloomy enough about the current Beach Cities real estate market. He felt that by not saying the entire market was falling apart and we were headed toward the depths of the great abyss I was cheer leading... The Beach Cities real estate market just isn't where he wants it to be right now. It may wind up there but it isn't there today... and if he considers that cheer leading... then he's right.

The problem is that I've been through a number of these markets and while the current market is no great fact it stinks... it is far from the worst I've seen over the years. A major measure of where the market is headed is in the number of Bank Owned(***REO) properties in a community. We are definitely seeing more then we saw in previous years because the market has changed. There are more in December of 2008 then there were in January 2008; but we are a long way from seeing the problems of other parts of the state. Palmdale and Lancaster have been seeing 200-300 per day per city.

Will we see more *NOD's, ** NOT's and ***REO's next year... of course. The economy sucks and people are losing their jobs, getting divorced and facing health issues...even in Manhattan Beach and the Beach Cities. Last year The Beach Cities combined saw a total of 85 homes become lender owned.... 6 in El Segundo, 10 in Manhattan Beach, 12 in Hermosa Beach, 39 in North Redondo and 18 in South Redondo. It would not surprise me to see at least twice that number in 2009. These numbers will not create chaos in the Beach Cities. They will however push prices further appraisers view the REO prices as appropriate market comps rather then aberrations in the marketplace. This is bad news for sellers and good news for buyers.

South Bay-Beach Cities: NOD's January - December 2008

South Bay-Beach Cities: NOT's January - December 2008

South Bay-Beach Cities: REO's January-December 2008

January 2009 figures will not be available until the end of February.

* NOD's( Notice of Default)
** NOT's ( Notice of Trustee Sale)
*** REO's ( Bank owned properties)

Click here for information on how the foreclosure process works....


Anonymous said...

I can assure you that you haven't been through a cycle like this.

I work at a 75 year old investment firm, with a global footprint. We have relationships with the top 1000 companies in the world. On any given day, you can see folks like Jeff Immelt and Rupert Murdoch in our lobby, waiting to meet with our portfolio managers.

The single, consistent message we are hearing across the board is one of sheer terror. Demand is contracting far faster than the official government statistics state. Most companies are planning for a 15% revenue decline this year alone. More cyclical industries are expecting worse.

Every executive I talk to says that January was worse than December and February was worse than January. The revenue declines are staggering. They show no signs of letting up. In addition to the announced layoffs, companies are unilaterally cutting 10% of SG&A just to try to mitigate the impact of negative operating leverage. That eventually filters through to jobs, whether it's at companies themselves or suppliers.

The stress is even worse at small businesses. They are fighting for their life. Given that most of the US population works for small businesses (vs Fortune 500 companies) these job losses don't show up in the headlines.

Unemployment will likely be 10% by 4Q 09. GDP will still be contracting then, because 4Q 08 was still pretty good, all things considered. That means we get another ramp in unemployment in 1H 10, probably to 11 or 12%.

The world has never seen a GDP/employment contraction as sudden, violent or as rapid as this in its history. Using the "this is just a recession" playbook from the 70's and 90's is a very dangerous strategy in my view.

caveat emptor!

Kaye said...

Anon 3:41,
I sincerely hope you are wrong.

Anonymous said...

I'm the one who compared what you do to cheerleading, though I think you added characterization to suit your self-perceived role as a victim. It is not falling into an abyss. It is falling back to normal. And as I've said before, it could be a slow slope down or quick one, but it's just gravity, and we know basically where the arc ends up in the long run. Only you view normal as the Apocalypse, which apparently means a period of time when prices are in line with incomes and free from doomed credit schemes, when oppressed realtors aren't able to make the insane boatloads of cash of the last few years. You stood with your bullhorn here, giving overly optimistic reports as if you were some objective source.
You did your part as a local bubble blower to fan the frenzy. You say you've been through this before, but if so, how could you so dramatically facilitate what could only end as this latest cycle is now? How could you not realize what you were helping along?

There is some hard reckoning going on right now. There's no choice. Even on your part, it seems, because gradually even you are getting closer to facts, and giving more sober assessment as we take the measure of what exactly has been lurking in the closet for so long. It won't be the apocalypse you suggest, but it's not going to be easy for most of us, buyer, owner, prospective buyer, renter, realtor, whatever.

Kaye said...

Anon 4:42,

Oh come now... I certainly don't see my self as a victim...nor do I see you as one.

What I do see is that you are very angry about the local real estate market. You may not like what I post but I post exactly what happens every month.. the number of homes for sale, those pending and the number sold. You can verify everything I post using a number of resources.

The truth is agents hate markets that swing too far either way. If it were up to agents the market would always remain stable. The fact is buyers determine markets... either up or down as they are the ones who decide how much they will pay for a home. This market started slowing in 2006 when buyers just stopped buying for about 5 months...Certainly there are other conditions that are now defining the market, but in 2006 buyers made a statement and things started changing.

You may not agree with my perception of the market but then you don't have to. We don't have to share the same point of view. That's what makes life interesting. We don't disagree that the market is headed downward but rather about how far the market will go down. I see hard times ahead but not total disaster. Frankly hope I am right and you are wrong. Only time will tell which of us is correct.