First, here is the Case/Shiller chart for San Diego from Piggingtons.com. It looks like the price declines are in double black diamond territory (steep!).
From the desert bulletin
Home prices in Southern California are racing downhill, but does that mean it's a buyer's market?
Each month real-estate agents watch prices plunge and foreclosures soar, and several buyers are still in no rush to make deals.
Perhaps they shouldn't be.
"Prices aren't just falling - they're falling faster than they were," said Michael Carney, executive director of the Real Estate Research Council at Cal Poly Pomona. "This (recent data) is not suggestive of a bottom," Carney said. "We're all looking for the bottom in home prices... but the market doesn't all of a sudden turn around." San Bernardino-based real-estate agent Hamid Aghili was so surprised by April's positive data on new home sales, he initially argued it was a mistake. He sells new homes but hasn't negotiated a sale in months. "Prices are lower, but people don't have money," said Aghili, who works at Century 21 Town & Country. The 15-year real-estate veteran's phone range off the hook during the housing boom, but not these days. More often than not, Aghili finds himself working on "short sales," where delinquent homeowners avoid foreclosure by selling their deeply-discounted house on the market at a loss to the bank. Some banks will accept this if it makes more financial sense than foreclosing. Aghili feels the market will bottom out in early 2009. Some would say he's optimistic. Josee Maclaughlin, real-estate agent with Century 21 Beachside in Upland, thinks 2010 might be the long-awaited bottom-out year. About 60 percent of her business is short sales right now. Rialto has 778 bank-owned properties and another 970 in the pre-foreclosure stage. City leaders say that's a recipe for suburban blight, and they hope to stem the tide. Rialto is the latest Inland city to go after lenders and financial institutions as a tactic to force someone to be responsible for the upkeep of abandoned houses after distressed homeowners have packed up and moved away. Murrieta and Lake Elsinore passed city ordinances to deal with the problem. Calimesa, Hemet and Temecula are pursuing similar avenues for halting the pace of residential eyesores. "In Rialto, we had about 480 foreclosures in 2007," Dutrey said. "In 2008, the way things are going, we're going to have over 1,000 foreclosures."
Some are even doing it over the Internet to cut costs.
There are pros and cons to bidding online, and bidding on a developer-owned home comes with its own issues.
Keep in mind that you can't visibly see who you're bidding against over the Internet.
And a builder can sometimes reject the highest bid.
It's different from a bank-owned auction, where banks mired by the subprime mortgage meltdown are desperate to clean up the foreclosures on the books.
"The pro is that you're bidding before the sale," said Lori Allen, customer service manager with Dallas-based Hudson and Marshall, an online live auction company.
Fontana, Corona, Victorville and San Bernardino - among other cities in the two-county area - are hot spots on the company's radar right now.
"If you do your homework, sometimes you can get the house before the sale," Allen said.
Developer Mark Gardner made the choice to send 25 of his never-lived-in homes to a virtual auction block at www.FRE.com/215R5.
"We overbuilt for the current market conditions," said Gardner, who owns Redlands-based Gardner Construction.
Only a few pockets of healthy real-estate markets have sprouted up across the nation, but areas like Southern California are still wallowing in a mess of foreclosures that many experts say will force sales and prices lower over the next two years
13 comments:
We actually made an offer on a home this week and offered 15% less. I realize we're one of the few people doing this, but it's going to be down there anyway.
Not sure what our chances are. Crossing fingers.
Ya know, all I hear about are falling prices and record breaking inventory, but to me, it still seems like there's not much out there to buy. What I see are a few categories, none of which are favorable at all:
1) Overpriced REOs
2) Fairly priced REOs....but they already have 50000 offers at over asking
3) Short Sales
4) Overpriced homes from people who bought at the peak and think they are going to unload the house for the price they bought at.
What I'd like to know is, when are normal people, with normally priced homes going to start appearing??? It's FRUSTRATING! Because here I sit with fabulous credit, a good job, a down payment, and a wish for a normal 4 bed/2 bath house in a decent area without a pool...not such a hard request...but shit, I'm not going to pay $3500/month for that! ...especially in freakin' Riverside!
Please somebody else tell me they're frustrated too.
I'm frustrated too!
;-)
We actually made an offer on a home this week and offered 15% less.
That's 15% over what it will be worth in a year or two. Good luck.
Not necessarily, Tyrone. We're all just polishing on our crystal ball(s) here. At least she has some balls and is putting her money on the line. The future isn't THAT predictable. Paige may have made a very astute move. By making her offer low, she is protecting herself from the current market and discounting into the future. She is playing off the fear in marketplace to her advantage, at the moment. What if the market only dips another 10% or less? Then you would have to call her a financial genius. There are so many other factors that play into an individual decision to purchase, that may affect what a person values a property at. Sincere best wishes to you Paige.
How does the whole short sale process work?
I see houses post on to the market as short sales which I understand they have to be approved by the lender correct?
I see some post at say $400,000 then a month later they are dropping it to $380,000 what is the deal some I would think would get offers maybe maybe not. But then a month later the price drops another $20,000 so how is the home owner going to get the lender to approve the lower price drops.
Then theses properties are on there 70 days 100 days on the market.
Most short sales right now are a lost cause. When you make an offer on a short sale, it is submitted to the lender for approval. Getting an answer can take weeks or months because they are so swamped. To make matters worse, you are probably dealing with 2 lenders since most homes have 1st's and 2nd's. Getting both of them to agree is hard since the 2nd holder often gets nothing or a very small amount. You also have to make sure the bank has approved the owner to try a short sale. Some owners just list em as short sales without getting the ok from the bank. If it's not approved don't waste your time. If the banks would improve the response time I'm sure they'd have way more success with the short sales. I know several people that submitted offers on short sales and ended up just giving up because they got no response from the lender.
I bought an REO in Lake Hills for $105 per foot and 100k off he asking price. Which hopefully is close to development cost (thanks X).
I needed to move or I would have waited.
The short sales are a pain in the ass.
I would suggest the REO's and do your home work. Offer them anything you want and see what they say. I also dealt exclusively with the listing agents.
T
Congrats on finally getting one (at your target price). The fact that you got it $100k under the asking price is good news too!
Thanks.
They were high 530k and I got it for 445k plus 14k in closing costs. It's next to the one that listed for 389k, I was all over that one even before it was appraised ( that may be a good way to hunt; watch the short sales that get foreclosed on and then contact the new agent that get's the REO before it hits the mls, this lender had rule to put it on the mls for 5 days including one weekend or I could have gotten it by offering the asking price before it was listed( I still could have gotten it for around 415k but the one next store is 600' bigger so 105' vs 118')the name of the new agent will be posted on 8x11 paper on the window as an emergency contact for the bank and you can contact them direct while they are waiting for the appraisal).
Anyway thanks again, I hope they level off before too long but either way it means a lot to me not to have to move the family twice and I plan on keeping the house for 10 years or longer.
Your info was most helpful.
T
What about homes in the Murrieta/Temecula area. The listing prices of most reos are extremely low and these properties are getting anywhere from 5 to 15 offers on them some well above listing prices. Also, homes are going for 30%-40% of their previous values. How much farther do think homes in this area will fall? Why is there so much buyer activity now? Also, if prices are expected to bottom next year, won't there be a lot of buyers waiting for next year wich will increase competition and drive up prices to near current levels?
Just wondering what you all thought?
Thanks
There's is a lot of competition for only the very lowest priced homes. Not much else is selling. It's normal for this to happen. It's not going to stop the price declines. There's far too much inventory, there are thousands more foreclosures coming and many of those so called buyers can't qualify. Ask an honest agent (yea, I know oxymoron) "how many of those offers actually have a chance of closing?" The fallout rate is still very high due to the tightened credit environment. This is the selling season and it's still the worst on record. Prices are still falling, sales numbers still suck. Wait until this winter, that's when I expect to see the real price cuts on a much bigger level. Right now it's just one or two at a time. Wait until the banks capitulate and drop the prices on them in bulk.
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