RealtyTrac Vice President Daren Blomquist presents about the nascent residential real estate recovery at the 35th annual Real Estate & Economics Symposium sponsored by the Fisher Center for Real Estate and Urban Economics at the University of California at Berkeley.
5. DARK CLOUD: LATENT DISTRESS
1.5 million U.S. properties in some stage of foreclosure
REO inventory
REO inventory
represents 15-
represents 15-
month supply at
month supply at
current REO sales
current REO sales
pace
pace
5
13. PRICES RISING NATIONWIDE
California foreclosure
California foreclosure
prices increased 44
prices increased
percent YOY, biggest
percent YOY, biggest
increase since Q2 2010
increase since Q2 2010
First annual increase in
First annual increase in
average foreclosure
average foreclosure
price since Q2 2010 and
price since Q2 2010 and
biggest increase since
biggest increase since
Q4 2006
Q4 2006
September 2012 foreclosure activity was 47 percent below the peak year of 2009 and 18 percent below 2007 levels, the first year we started to see elevated levels of foreclosure activity nationwide.
Foreclosure Inventory down 32 percent from peak of 2.2 million in December 2010, but still stubbornly high. We estimate only 15 percent of REO properties nationwide are listed for sale, frustrating real estate agents with ready, willing and able buyers. In California, we’re estimating only 11 percent of the unsold REO inventory is listed for sale. Although in California, REO inventory is down to about 70,000 as of the end of October, down 50 percent from the approximately 140,000 in October 2010, when the robo-signing controversy came to light.
In places like Merced, Sacramento and Stockton, the underwater percentage is 40 to 50 percent of all mortgages, but in San Francisco County it’s only 10 percent.
The second quarter annual decrease in foreclosure-related sales was the first annual decrease after five consecutive quarters of increases.
On track for more than 1.1 million short sales, both those in foreclosure and those prior to foreclosure start, in 2012. That compares to about 625,000 completed foreclosures for the year. Also consider sales of non-performing loans at a discount, which could delay another round of eventual foreclosures.
Flippers are eating up the distressed inventory at low prices, fixing it up to better condition and either flipping to another investor who then rents the home or to an owner-occupant who lives there. Flippers are filling an important need in the distressed property-heavy housing market, but there is risk that the flipping frenzy may be creating some mini price bubbles in some markets.