Foreclosures down 41% in California and 19% nationwide
By Kurt Wannebo
January 5, 2013 (San Diego)--The year 2012 has become the critical turning point in this downward market that began many years ago. Analysts will say that the real estate market started its downward trend in 2008, however, through my work I was able to see indicators and pockets of areas starting to decline as early as 2006.
That was the year I decided to sell all of my investment properties. Those same people, media included, are probably not even going to mention a real estate market recovery for another 12 months or so. This is mostly due to the fact that Southern California stands at the forefront of the real estate market in our country.
Data from November 2012 shows that nationally, foreclosures are down 19% from last year and in California alone they are down 41%. This is the lowest they have been in over 6 years and all of the data points towards this downhill trend continuing.
So where is all of this shadow inventory that you’ve been hearing about from the market recovery naysayers? Well there simply isn’t any. For years people have been claiming that banks are holding on to hordes of foreclosed properties to avoid flooding the market and reducing prices even further. However, prominent foreclosure data tracking companies such as ForeclsoureRadar.com, who track all foreclosed properties statewide, as well as how many are put back on the market and sold, have claimed the nonexistence of this “shadow inventory” for years.
While some properties are sold in auctions and bulk dealings, this is typically only after they couldn’t be sold on the open market. Therefore the notion of thousands of bank owned homes sitting and waiting to flood the market is more a product of water cooler banter versus hard data about the real estate market.
The decline in foreclosures over the past several months has led to a critical drop in inventory across many markets in the U.S., and most predominately in California. California’s market inventory has been reduced by 43.6% in the last year to a supply of 3.1 months, which is the amount of time it would take to sell all the homes currently on the market based on demand. Additionally, the amount of time to sell a home has dropped 31% to an average of 38 days.
Starting in early summer 2012, not only have we seen new home sales increase due to a reduced inventory and record low interest rates, but prices are continuing to stabilize across the country every day.
The median price in CA from last year is up by 23% and sales are up by 10% from last year as well. These numbers come on the heels of many months of gains. I’ve been telling everyone if you have been waiting for the bottom of the market, news flash, you missed it!
So what are you to do if you are considering buying a new home?
My first piece of advice is to find a knowledgeable and experienced real estate broker. When I mean experienced, I mean experienced in today’s real estate market. The market has been a rollercoaster the past 7-8 years, and most agents are not able to adapt to that. The average real estate agent completes about 4-6 deals a year, however this is not aggressive enough, since other agents are able to sell in a matter of days. You want an agent who closes at least 15-20 purchases a year, since they are the ones who know how to get buyer’s offers accepted. There is a high level of competition amongst buyers due to the lowered inventory, so buyers have to use A LOT of tricks in order to stand out and get their offer picked by a seller---and it isn’t always about writing the highest offer.
Bringing an offer in above asking price, along with other aggressive tactics, are really only the first steps in being able to successfully pick up a property. Your agent also needs to know how to deal with the frequent problems that are prevalent in today’s market, like appraisal issues.
By doing some research and choosing an agent that has a track record of getting their client’s offers accepted, you will save yourself a lot of time and headaches of writing multiple offers with no positive outcomes.
Additionally, it is important to make sure you have a buyer consultation and all of your financing taken care of, including a full loan application completed, before you even set foot on a property, or you are simply wasting your time.
In this fast selling real estate market, preparation is key to being able to get the home you want at the lowest price possible.
Kurt is CEO of San Diego Real Estate and Investments and sells hundreds of homes each year, placing him in the Top 10 list in sales for San Diego. He has traveled all over the country training other real estate agents, and has spoken at notable seminars of up to 3000 agents at a time.