It seems that more changes are on the way in our local real estate market as more pre-foreclosure and foreclosure properties hit the market. Last year North and South Redondo took the biggest hits from properties entering foreclosure. This year year Manhattan , Hermosa and El Segundo are showing increases in the number of properties in trouble. The numbers reflect an increase in new construction projects... both homes and townhomes... along with older homes and townhomes.
Short sale listings are on the rise in all the Beach Cities but these often take a long time to get bank approval. This is especially true if the bank is out of state or a small lender. I'm guessing that the February increase in NOD's(notice of default) and NOT's(notice of sale) is a reflection of the low home sale volume in the 4th quarter in the Beach Cities.A number of buyers are passing on the short sale option and waiting for these homes to become REO's(bank owned) in the expectation of a better deal. However that may notalways prove to be true as some banks would rather cut their losses quickly rather then go through a long foreclosure process if they see a good offer.
Beach Cities: NOD's January-February 2009(click on graph to enlarge)
Beach Cities: NOT's January-February 2009
Beach Cities: REO's January-February 2009
4 comments:
Thank you Kaye for this report. I think the rest of this year will be even more challenging as the J.P. Morgan Chase, Citigroup Inc. and Bank of America Corp foreclosure moratorium just ended on March 6th. Without that voluntary moratorium, these numbers would have been much higher to say the least. In the end, those in trouble are still in trouble and postponing the inevitable will not do a thing. It will just show up in later.
Anon 3:40,
I agree time will be the telling factor.
I have heard that it is a waste of time to deal with short sales, because it takes too long to hear back from the bank. That may be why their is little activity.
I'm also wondering if the foreclosure moratorium's have had any impact on slowing the notices. Also, I believe that CA changed it's notification rules at the end of last year, which effectively stop notifications for several months while lenders caught up.
These factors may be skewing the numbers somewhat.
But then again, who knows? It was announded today that February federal tax receipts were at the same levels as 1985, and 68% lower than February 2008. It is hard to say if the economy is just collapsing, or if everyone is just saying "screw it".
Anon 6:43,
Short sales can be a lot of work and present some real problems... however if you are dealing with a local bank ... Vineyard is a great example... they will get back to you within a week. The problems arise when you are dealing with the Bank of the Midwest who have no clue about our market... they can take 2-3 months to give an answer and then change their minds 3 days before close of escrow.
I'm not sure how much impact CA forbearance law had in our area. I suspect the impact was relatively minimal.
I think we are seeing an increase in NOD's because some of the homes that folks planned to sell in the fall just haven't sold.
If you look at ratios for NOD's to NOT's to REO's... the Beach Cities are doing better then other parts of the state... but it is going to get worse.
I think folks are scared and don't know what to do. You are right many are just saying "screw it" as they have no idea what their options are.
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