Has Santa Ana or Riverside seen the worst yet?

[zubs_IHB]

As much as I would like to see prices drop further, you have to know that you are dealing with a government that is doing all it can to keep RE from going down. In all of your pricing equations and foreclosure metrics, you are still sitting across the table in a poker match against the Federal Government and their big bank allies, and their strategy is to create a flat line for as long as it takes. They will do all they can to stop any type of shocks.

Think 10 ~ 20 yrs of a flat to small declining market. Maybe Japan's lost decade? This is the best we can hope for and is happening now.

 

[Geotpf_IHB]

Is there a source that shows how many REOs are actually sold during a given time period?

If I look up the REO sales on the MLS trending for the past months within the city of Riverside, will you two please stop with the dropping of cats?

That would be very nice of you.

Riverside OREOs

Month - # - total sales - % of total sales

Jan08 - 25 - 172 - 14.5%

Feb08 - 23 - 107 - 21.5%

Mar08 - 55 - 219 - 25.1%

Apr08 - 82 - 230 - 35.7%

May08 - 134 - 318 - 42.1%

Jun08 - 188 - 398 - 47.2%

Jul08 - 225 - 417 - 54.0%

Aug08 - 235 - 464 - 50.6%

Sept08 - 269 - 484 - 55.6%

Oct08 - 279 - 495 - 56.4%

Nov08 - 262 - 420 - 62.4%

Dec08 - 298 - 494 - 60.3%

Jan09 - 284 - 425 - 66.8%

Feb09 - 259 - 367 - 70.6%

Mar09 - 471 - 594 - 79.3%

Apr09 - 380 - 499 - 76.2%

May09 - 360 - 497 - 72.4%

Jun09 - 421 - 584 - 72.1%

Jul09 - 343 - 535 - 64.1%

Aug09 - 285 - 487 - 58.5%

Sept09 - tba

source - SoCalMLS

-IR2

So, every month for the last year, the number of REOs sold was greater than the Foreclosure Radar number of new bank owned properties (233, from 932/4). Now, there were probably more foreclosured properties in an average month earlier in the year than currently, but there were more sales as well.

I'm actually surprised at home many sales are REOs. In March, for the most extreme example, 79.3% were REOs. Even if organic sales are minimal, you would think there would be more forced sales due to moving/probate sales/short sales/flippers than that.

 

[Geotpf_IHB]

Geo - I have made you this offer a couple of times before and you have yet to take me up on it, but I will make it again.

Give me a zip code in Riverside, preferably yours but not necessarily, and pm me your email address and I will email you the FR list of REOs in that zip code. You can then use Redfin to see which are listed and I am fairly sure one of our professional realtors on this site will be kind enough to send you the list of properties in escrow. Using those two lists, you can see exactly how many REOs are not already sold without having to use any assumptions or estimations. Whaddaya say?

Thanks for the offer, but I don't think it's neccessary. IR2's numbers seal it for me.

 

[graphrix_IHB]

Riverside OREOs

Month - #

Jan08 - 25

Feb08 - 23

Mar08 - 55

Apr08 - 82

May08 - 134

Jun08 - 188

Jul08 - 225

Aug08 - 235

Sept08 - 269

Oct08 - 279

Nov08 - 262

Dec08 - 298

Jan09 - 284

Feb09 - 259

Mar09 - 471

Apr09 - 380

May09 - 360

Jun09 - 421

Jul09 - 343

Aug09 - 285

Total sales = 4878

Average monthly OREO sales = 244

source - SoCalMLS

-IR2

There were 6327 REOs in the city of Riverside from Jan-08 to Aug-09 according to Foreclosure Radar, a difference of 1449. That is six months of inventory if you use the 244 average monthly OREO sales number. FWIW, FR's archived numbers tend to be less than what they report in the news and less than what DataQuick reports, so I am being very... very generous in using FR's numbers, because if I use DQ's numbers then that number would be a lot higher than 1449.

 

[ihate-nar_IHB]

As much as I would like to see prices drop further, you have to know that you are dealing with a government that is doing all it can to keep RE from going down. In all of your pricing equations and foreclosure metrics, you are still sitting across the table in a poker match against the Federal Government and their big bank allies, and their strategy is to create a flat line for as long as it takes. They will do all they can to stop any type of shocks.

Think 10 ~ 20 yrs of a flat to small declining market. Maybe Japan's lost decade? This is the best we can hope for and is happening now.

I agree, but how many of others here agree? Let's take a vote guys.

 

[RobertLarsen_IHB]

As much as I would like to see prices drop further, you have to know that you are dealing with a government that is doing all it can to keep RE from going down. In all of your pricing equations and foreclosure metrics, you are still sitting across the table in a poker match against the Federal Government and their big bank allies, and their strategy is to create a flat line for as long as it takes. They will do all they can to stop any type of shocks.

Think 10 ~ 20 yrs of a flat to small declining market. Maybe Japan's lost decade? This is the best we can hope for and is happening now.

1 to 2 more years of decline... eh, maybe not confident to bet everything I have against that prediction.

But,

10-20 years of flat or declines... How much you wanna bet?

 

[FairEconomist_IHB]

No, Riverside deserves a significant premium over Moreno Valley-always has had such, always will.

Likewise, Corona gets, and deserves, a significant premium over Riverside, due to it being even closer to Orange County

A premium, sure. But right now Riverside has more than a 50% premium over Moreno Valley (including the Canyon Crest/UCR area which is literally over the hill) and is at the same price as Corona. That's not sustainable. Corona-MoVal-Hemet make a reasonable sequence at current prices but Riverside has to fall 15-20% to fit in.

 

[No_Such_Reality_IHB]

No, Riverside deserves a significant premium over Moreno Valley-always has had such, always will.

Likewise, Corona gets, and deserves, a significant premium over Riverside, due to it being even closer to Orange County

A premium, sure. But right now Riverside has more than a 50% premium over Moreno Valley (including the Canyon Crest/UCR area which is literally over the hill) and is at the same price as Corona. That's not sustainable. Corona-MoVal-Hemet make a reasonable sequence at current prices but Riverside has to fall 15-20% to fit in.

At 20% unemployment U-3 and who knows how bad, U-6, the premium is immaterial. Nothing is sustainable.

 

[ihate-nar_IHB]

As much as I would like to see prices drop further, you have to know that you are dealing with a government that is doing all it can to keep RE from going down. In all of your pricing equations and foreclosure metrics, you are still sitting across the table in a poker match against the Federal Government and their big bank allies, and their strategy is to create a flat line for as long as it takes. They will do all they can to stop any type of shocks.

Think 10 ~ 20 yrs of a flat to small declining market. Maybe Japan's lost decade? This is the best we can hope for and is happening now.

1 to 2 more years of decline... eh, maybe not confident to bet everything I have against that prediction.

But,

10-20 years of flat or declines... How much you wanna bet?

Then back your 1 to 2 years and increase in prices thereafter by some theory. Return of sub prime? 4 to 5% employment(from 12%) in 1 to 2 years? First time home buyer credit increasing to 25K? California out of its trouble? Interest rate going down to 3%?

 

[Geotpf_IHB]

No, Riverside deserves a significant premium over Moreno Valley-always has had such, always will.

Likewise, Corona gets, and deserves, a significant premium over Riverside, due to it being even closer to Orange County

A premium, sure. But right now Riverside has more than a 50% premium over Moreno Valley (including the Canyon Crest/UCR area which is literally over the hill) and is at the same price as Corona. That's not sustainable. Corona-MoVal-Hemet make a reasonable sequence at current prices but Riverside has to fall 15-20% to fit in.

I think part of that is due to the fact that Moreno Valley is overbuilt vs. the number of jobs in the area. Riverside isn't as much. Plus, Moreno Valley isn't as built out as much as Riverside is. Riverside is also an actual "city", if you will, with a downtown and cultural institutions (and is the county seat), while Moreno Valley is basically just a giagantic subdivision. Corona is, in some ways, less of a "city" than Riverside as well.

Moreno Valley stopped falling later than Riverside and has (so far) just bottomed with no recovery, while in Riverside prices are actually rising (from the bottom).

 

[BankProspector_IHB]

Has anywhere seen the worst of it? Q2 bank reports show that more people are falling behind in their mortgages and banks are buying more properties back. I think its safe to safe its not over anywhere yet, though we may be reaching an acceptable level for home prices.

US Banks Residential Portfolio Loan Default and REO Report

 

[graphrix_IHB]

^^^ I think this is the best on topic spam we have seen. And... they are in the US.

 

[BankProspector_IHB]

Hey, that might be slightly commercial but its legitimate research with a thoughtful post no ?

Didn't mean to be spammy just trying to connect out there...

 

[awgee_IHB]

Has anywhere seen the worst of it? Q2 bank reports show that more people are falling behind in their mortgages and banks are buying more properties back. I think its safe to safe its not over anywhere yet, though we may be reaching an acceptable level for home prices.

US Banks Residential Portfolio Loan Default and REO Report

For a short while I thought maybe parts of the IE, Florida, Stockton, Sacramento, Nevada, and Arizona, but have since changed my mind when confronted with the numbers.

 

[awgee_IHB]

As much as I would like to see prices drop further, you have to know that you are dealing with a government that is doing all it can to keep RE from going down. In all of your pricing equations and foreclosure metrics, you are still sitting across the table in a poker match against the Federal Government and their big bank allies, and their strategy is to create a flat line for as long as it takes. They will do all they can to stop any type of shocks.

Think 10 ~ 20 yrs of a flat to small declining market. Maybe Japan's lost decade? This is the best we can hope for and is happening now.

An example from Calculated Risk on the backstopping effectiveness of the government.

"Mortgages guaranteed by the U.S. government, primarily through the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), also showed higher delinquencies than the overall servicing portfolio. Serious delinquencies increased to 7.5 percent of all government guaranteed mortgages, up from 6.8 percent in the previous quarter."

 

[Geotpf_IHB]

As much as I would like to see prices drop further, you have to know that you are dealing with a government that is doing all it can to keep RE from going down. In all of your pricing equations and foreclosure metrics, you are still sitting across the table in a poker match against the Federal Government and their big bank allies, and their strategy is to create a flat line for as long as it takes. They will do all they can to stop any type of shocks.

Think 10 ~ 20 yrs of a flat to small declining market. Maybe Japan's lost decade? This is the best we can hope for and is happening now.

An example from Calculated Risk on the backstopping effectiveness of the government.

"Mortgages guaranteed by the U.S. government, primarily through the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), also showed higher delinquencies than the overall servicing portfolio. Serious delinquencies increased to 7.5 percent of all government guaranteed mortgages, up from 6.8 percent in the previous quarter."

Due to the low down payment requirements of those loans, this isn't surprising, at least for FHA. Now, VA requires no down at all, but you might think that ex-military folks might be slightly more trustworthy buyers (in general) than the public at large.