When is it going to happen?

I think that I've mentioned here before that one of the things you get when you're in my line of work is a lot of questions from the public at large. It's probably something like being a doctor or lawyer in that when you meet people and they find out what you do, all the questions (and occasional horror stories) come out. I'm OK with that. If you know me, you probably know it's harder to shut me up than anything when I start talking about real estate.

So several times over the past few months, I've met folks and they find out that I'm a Realtor, and inevitably some variation on this question comes about the market: "When are we going to see prices back up where they were?". I think that if you own a home, you're hoping against all hope that I'll tell you that it's right around the corner.

Well, it's not.

Will we get back to 2005 price levels again? Yes, of course we will. Markets tend to work in cycles, but with the ups and downs, the trend line over the long haul is always up. I moved to California in 1982, and when I heard people talking about real estate, everybody was saying that they wished that they'd bought a house 20 years before. Then I bought my first condo in 1992, and everybody told me that it was too bad that I didn't do it 20 years ago. It's a constant throughout the 27 years that I've lived in the Bear Republic - gee, real estate would have been a great investment 20 years ago.

And what do you figure people are going to be saying in 2030?

So here's how I see this - most of us who own a home have a piece of property that would sell for about half of what it would have sold for four years ago, give or take. If you bought it four years ago, that really hurts. But if you aren't over your head on the payments, the time will come when you'll see equity again. The problem we have right now is that a lot of folks can't make the payments. Either the adjustable rate is biting them in the butt, or they've had a loss of income, and as a result we're seeing a lot of foreclosures. I've been hearing more in the news about people doing "strategic defaults", and I have some opinions about that idea that are better saved for another post, but I don't think that accounts for a huge portion of what we're seeing now.

So back to the title of the post: When is it going to happen? When are we going to see a recovery in prices that will get us back to 2005 levels. The real answer here is "It depends". Don't you just love getting vague answers?

But it does depend on a lot of things. Any recovery we see in the foreseeable future is going to have to be driven by affordability. People have to be able to make their payments. So part one of the recovery has to do with household income levels. The bigger economic picture needs to improve to a point where there are good, solid, long-term jobs. As long as we are seeing double digit unemployment, we can probably figure on just about zero in terms of housing price recovery.

Part two has to do with lending. Gone are the days when you could walk into a mortgage office and tell them that you make $100K a year and walk out with a pre-approval for $500K on a stated income loan. And you aren't seeing a lot of lending done with adjustable rate, interest only mortgages any more. You actually have to document income now, and if you do take out an ARM loan, you probably have to qualify for the highest payment on the schedule rather than the intro payment. And zero down? Unless you qualify for VA, forget about it. Ain't happening.

These are all probably healthier things for us in the big picture, but short of our financial and government institutions waking up one morning with amnesia - which admittedly has been known to happen - those days are probably gone for a long time. And in retrospect, the thing that drove prices up to astronomical levels wasn't so much demand as it was access to easy money. Easy money has left the building. We'll probably see it again some time in our lifetimes, but not for a while.

So the bottom line is this: I think that a reasonable expectation when we start to see appreciation again would be something on the order of 3-5% per year for a while, with maybe a few better years here and there. Certainly nothing like the explosion that we saw from 2002-2005. So working with that level of growth, we're probably looking at probably 10 years minimum before we get back to our previous peak. If we get there a lot faster than that, I'd be concerned about sustainability.

I hope everyone has a fun and safe New Year's celebration. See you back here next week for a fresh look at the first market stats of 2010.

Monday Morning Numbers 12/28/09

Welcome back from Christmas. We had a very nice low-key Christmas at our house, just a few small presents and a very tasty non-traditional tri-tip for dinner. Yum. Let's take a look at our market stats for the last time in 2009:

Active Listings: 83
Contingent Listings: 46
Pending Listings: 44 (25.4% of the inventory)
New listings: 4
Months of inventory: 4.2
Click here for an updated price per square foot chart.

Last week and this week are typically very light activity weeks across the board. Not many new listings came on last week, and I'd expect the same this week. And we aren't likely to see a lot of new pending listings either. We're at a high point for inventory both in terms of number of units and months of inventory since the end of September, but I wouldn't be surprised if that drops a little when the calendar changes over to 2010. We usually see a handful of listings expire at the end of the year.

I'm not sure what the post is going to be later this week. I'm trying to come up with something a little more interesting than a neighborhood focus. I have kind of a half-formed idea that I need to flesh out. We'll see if I can pull something together.

Focus On Mesa Oaks & Country Club

Over the river and up the hill we go to take a look at recent activity in our high-end neighborhoods, Mesa Oaks and the Country Club. For a little background on these areas, you can go back to the first post I did on the area several months ago.

The inventory level has been pretty stable up there despite the decrease in overall inventory in our market. This is mostly because unlike most of the rest of our market, this area hasn't been hit hard by distressed sales. At the moment, we have 12 active listings in these areas, with only one REO, 2 short sales, and all of the other 9 are traditional sellers. We only have one contingent sale up there, a short sale awaiting lien holder approval.

Sales activity in these neighborhoods has been slower than the market norm. We only have one pending unit in the area (an REO), with only 3 sales in the past three months. One of those was a short sale, and the other two were traditional sales. Sales in the high end tend to go a little slower in these parts pretty much all the time so that's not shocking, especially with the absence of aggressively priced REO's.

With so few sales, it's almost impossible to identify any kind of price trend. I'd be inclined to say that we're probably flat to slightly decreasing up here because of the lack of activity. I suspect that when we start to see the market rebound, these neighborhoods will follow. At least some of the sales up here have traditionally relied on move-up buyers, and those are as rare as hen's teeth of late. Once we start to see some more recovery in the low-mid range, I would expect a robust recovery in the high end.

Hope everyone has a beautiful and peaceful Christmas. I'll see you back here next week for Monday morning numbers and whatever I can dream up for later in the week.

Monday Morning Numbers 12/21/09

Welcome back to another exciting edition of Monday Morning Numbers! Let's take a look at this week's market stats:

Active Listings: 80
Contingent Listings: 46
Pending Listings: 49 (28.0% of the inventory)
New listings: 13
Months of inventory: 3.9
Click here for an updated price per square foot chart.

No huge changes this week, but we are now at a 3 month high for total active listings on the market. Another week of double digit new listings has pushed us up to 80. We're still lean on inventory, though, and I'd be surprised to see a lot of new listings come on the market in the next two weeks.

Later this week Santa Claus will bring toys for all the good boys and girls. Those of us who didn't make the "nice" list, however, are going to be skipped. You know who you are... So you'll have to settle for an update of Mesa Oaks & Country Club activity instead.

Focus On North Lompoc

On up the map we go, moving into an update of market activity in the north side of town. For a definition of the area and the types of homes we are covering here, you can go take a look at the first post I did on the area back in April.

This area hasn't been as active as the central part of town. We have 7 active listings here at the moment (2 REO's, 3 short sales, and 2 traditional). In addition, we have 10 contingent listings here, all short sales.

Sales activity has been pretty solid, with 9 pending sales (3 REO/4 SS/2 Trad). We've seen 17 total sold units in the past three months (11 REO/4 SS/2 Trad). These numbers track very closely to the larger market, both in terms of months of inventory and in the mix of distressed properties.

Comparing the past three months of sales to the previous three months, it appears that there prices have been pretty stable in recent months, with possibly a very slight trend towards appreciation. It's a pretty diverse area in terms of the ages of homes, but when I pull out the age ranges and compare apples to apples, we're seeing slightly higher median sale prices recently, but slightly lower price per square foot numbers. As has been the case in the other areas I've covered, we're working with a small enough data set to have a lot of play in these numbers, so identifying a strong trend is pretty sketchy business.

Next week is Christmas. If I get a chance to post a "Focus On" piece early in the week, I'll cover Mesa Oaks/Country Club. If I don't, it can wait until next week. Even Realtors take Christmas off most of the time.

Monday Morning Numbers 12/14/09

Can you feel it? That magical time of the year is approaching. Oh yes - right around the corner. For the little kid in all of us, the anticipation is building, and we can't wait to see what surprises are in store.

But enough about the NFL playoffs. Besides, it appears that my beloved Bears are the proverbial lump of coal right now. Let's take a look at our market numbers:

Active Listings: 77
Contingent Listings: 48
Pending Listings: 45 (26.5% of the inventory)
New listings: 12
Months of inventory: 3.5
Click here for an updated price per square foot chart.

Another week of double-digit new listings has pushed our inventory up a but in terms of raw numbers, but because of increasing numbers of sold units, we remain pretty stable in terms of months of inventory. The number of pending listings continues to trend down a bit this week, so we might start to see that three month sales number that I use to calculate our months of inventory drop off in the next month or two.

Later this week I'll move the neighborhood focus north another notch and take a look at the north end of town.

Focus On Central Lompoc

Moving up the map a little bit this week, let's take a look at the activity in the central part of Lompoc. For a definition of the area and a general description of the homes here, you can go back to take a look at the first post I did on the area several months ago.

We've had some very strong, and very stable activity in the area for several months. That may be changing a little in coming months, however. Our inventory is down almost half from the last time I looked at the area, with only 9 active listings (6 REO's, 1 short sale, and 2 traditional sellers). Even with our inventory having been declining, this is a surprisingly large drop. We have moved up in the number of contingent listings in the area, though, with 15 (4 REO/10 SS/1 Trad).

Sales activity has been pretty solid here recently. We have 13 pending units (11 REO/0 SS/2 Trad). Yes, that's right - zero pending short sales in the area, which has been one of the more active parts of our market. We've had 31 sales in the area over the past three months, dominated by REO activity (21 REO/4 SS/6 Trad). Comparing the past three months to the previous three months, it looks like the values in this area have been flat, just like we've been seeing in the broader market.

Considering that this area has a good share of our entry level homes - easily our most active market segment - it could be telling to see how it develops, and how it affects the overall market. We're already thin for inventory, and if Central Lompoc dries up, as it appears to be doing, it could make for some interesting market conditions.

Monday Morning Numbers 12/7/09

Happy Rainy Monday, everyone! Time for our weekly foray into Lompoc market stats:

Active Listings: 72
Contingent Listings: 52
Pending Listings: 46 (27.1% of the inventory)
New listings: 9
Months of inventory: 3.6
Click here for an updated price per square foot chart.

Another week with no big changes. I'm continuing to watch the unlisted REO level, and it's back down in the high 50's now. That's been a pretty normal level for the year. What I've typically been seeing is that when that number gets up into the 60's, we get a little spike of new REO listings. It appears that we had that little spike a couple of weeks ago, and now we're back to a more normal level of activity. I wouldn't be surprised if the active listings drop down again in the next few weeks. Aside from the REO inventory, this is traditionally a time of the year when we don't see a lot of listings.

Later this week I'll re-visit the market numbers for Central Lompoc.

Focus On South Side Lompoc

Let's take a swing through the Southside and see what our market activity has been looking like recently. For a definition of the area and a description of the homes I'm covering here, you can go back to my April post on the area.

Activity has been pretty good in the area in recent months, and on some small numbers, it looks like we might be seeing a bit less REO & short sale activity here lately. We have 7 active listings here at the moment (2 REO/1 short sale/4 traditional). There are only two contingent listings here, one each REO and short sale. The pending numbers are similar, with 9 pending sales in the area (4 REO/2 SS/3 traditional). Both of those sets of numbers would point to a slight decline in the distressed listings in the area, but again, we're looking at very small sample sizes.

The sold numbers look very much like the larger market in terms of percentages. We've had 10 sold units in the area over the past three months (6 REO/1 SS/3 traditional). No big surprises here, but based on the active and pending sales, it looks like at the moment, we're seeing a bit of a decline in market share for distressed properties. That could change a lot in the course of a couple of months, however.

Values appear to be improving in the area. I pulled out the 1960's tract homes from this area that sold over the past three months, and compared them to similar homes in the area from the three months previous to that, and it looks like the prices have trended up quite a bit, by about 10%. Again, keep in mind that we're working with a very small set of data here, about 6 houses for each period, so there can be a lot of variation. I don't think that we have enough data to say that we've seen 10% appreciation in a quarter, but I do think that there is some indication that we might be on the front end of a recovery in the area.

Next week I'll move this analysis north a little bit and take a look at the activity in Central Lompoc.

Monday Morning Numbers 11/30/09

Hope everybody had a great Thanksgiving weekend. We were able to take a few days off ourselves, with a little work interspersed in there. Managed to avoid the shopping frenzy for the most part. Call me counter-culture if you will, but you couldn't get me within 100 yards of a mall on Black Friday. Anyway, let's take a look at our market numbers this week:

Active Listings: 68
Contingent Listings: 57
Pending Listings: 49 (28.2% of the inventory)
New listings: 8
Months of inventory: 3.8
Click here for an updated price per square foot chart.

No big changes here this week. I was a little surprised to see as many new listings as we did this week because it was a short week. I still think we're in a little bit of an upswing in listings, but it may not last for very much longer.

Later this week I'll get back into the groove of writing about neighborhoods with a Southside focus.

Giving Thanks

I'm going to depart from my usual mode of market commentary this week, because it's Thanksgiving weekend and I want to get a little personal and sentimental. So indulge me a little bit.

I'm a lucky guy. I'm not going to sit here and list all the things that I'm thankful for, because you'd stop reading after the first few pages. Heck, I'm married to Diane. 'Nuff said. Suffice it to say that I'm loving life, and I hope that comes through once in a while. What I want to tell you about today is why I'm thankful for my chosen profession.

I worked for 18 years doing computer support in a large corporate environment. It was an OK way to make a living. The money was good, had some good benefits, I was getting 4 weeks of paid vacation every year. But truth be told, while I didn't hate my job, I never really loved it. It was just something I did for money. I knew a lot of people in that field who really did love it - major techie geeks, couldn't get enough of it. I just wasn't one of them.

I watched the corporate culture change a lot over the years, and it got more cut-throat and less employee friendly with every passing year. Maybe that's not true; maybe I just tuned into it more as time went along. Coming up on about 6 years ago, the company I worked for outsourced my job to a vendor, and they let a lot of us who had been there for years and years go, figuring that they could get our jobs done by less expensive employees. By that point, I was really OK with that. A couple of other life changes led Diane to make a move into real estate sales, and about a year later, not liking what I was finding in the job market, I followed her into the business. Seemed like an interesting way of filling my days.

And interesting it is. In spades. Selling houses is one of the most challenging, difficult, and occasionally infuriating enterprises that you can find. Especially now, with REO's dominating the market and the lending side of the equation being as turbulent as it is. Every deal is different, and they're all white-knuckle rides all the way to the end. And you know what? I wouldn't do anything else. And a while back, I realized why that is. I actually care about what I do for a living now. It's part of me. It's who I am.

Ask anybody who sells real estate what their favorite days are, and most of us will tell you it's closing day. And for those of us who really love this, it's not just because we get paid (although that's a good thing, too). It's because we've just gotten a nervous client through a stressful period in their life. It's because we get to hand the keys to those first time buyers that we've been working with for over a year while they worked out some credit issues. There's a sense of accomplishment on closing day that I'd never gotten before, even at the end of a big project, or after I had solved a particularly vexing problem at work.

About a year ago, we hosted a morning at the movies the weekend before Thanksgiving. We didn't get that planned in time for the same time this year, but we hope to put together another one pretty soon. I told the crowd at the movie then that it was appropriate that we were doing that right before Thanksgiving, because it was our way of thanking them for their business and referrals. I told them that when you get to do what you love, every day is Thanksgiving.

And that's my wish for everyone. May every day be Thanksgiving for you.

Monday Morning Numbers 11/23/09

Good morning, welcome to a new week. Traditionally one of the shortest work weeks of the year, which I'm sure makes many of you happy. I always like this week, because it's the last few days of refuge from the non-stop barrage of Christmas music on the radio. I rarely listen to the radio during the rest of the year anyway, except that there's one in the office. And for whatever reason, I always seem to be around the office a lot between Thanksgiving & Christmas. My only prayer is that I can escape the season without getting subjected to "Grandma Got Run Over By A Reindeer". Anyway, strap yourselves in for another exciting MMN thrill ride:

Active Listings: 71
Contingent Listings: 55
Pending Listings: 48 (27.6% of the inventory)
New listings: 14
Months of inventory: 3.7
Click here for an updated price per square foot chart.

We got a nice little bump in our active inventory this week with those 14 new listings. It's still very thin, but that's a move in the right direction for anyone trying to find a home to buy. 8 of those 14 new listings for the week are REO's, so it appears that some of that small backlog that I've been tracking for the past few weeks is starting to break loose. Our months of inventory still remains low, in large part because the 3 month sales number that I use to calculate it is at 102, which is a high point for the year.

I think that I'll have something a little different for you later this week.

Hey, look! Another REO update!

You come to look at a real estate blog, you're gonna get some REO action now and then. It's been a couple of months since I did an update on what our REO activity looks like, so I figure I'm due for another one.

Not a lot has changed since the last update in terms of percentage of the market. As of today, 27.1% of our active listings are bank owned. That seems to be a pretty stable number, although the inventory is turning over rapidly. Despite accounting for only around a quarter of the active listings, though, REO's account for 44.7% of the listings in our MLS so far this year. What that tells you is that for the most part, they don't stay on the market very long. In fact, the median days on market for a sold REO this year has been 22 days, versus 53 days for non-REO's.

REO listings continue to account for most of our sales. 60.5% of sales this year have been REO's. That number might be trending down a little, as 57.4% of our sales in the past three months have been REO's, and only 53% of our pending sales are REO's. That trend may not hold if we start to see an increase in REO listings, however. I have some thoughts on that further down the page.

A couple of months ago, I posted a chart that outlines what's going on with homes in the foreclosure process. I pulled the data from Foreclosure Radar, and they've since updated the way that they track active auctions. I like the new way better - it looks more in line with the actual numbers that I've been seeing for unresolved trustee sales. So I've fixed my chart now to reflect that. What you'll see here is that over the past several months, there's some fluctuation in the number of notices of defaults and trustee sales, and the number of properties going back to the bank. There's not a strong trend in these numbers, although you could make a case for a slight upward trend over the past year. There's one easily identifiable trend, however. Do you see it? The red line? That's active auctions. What that's telling us is that we've got a growing backlog of unresolved trustee sales. I've written about this a few times. What we've been seeing more of than anything in recent months at the courthouse steps is postponements. Some cancellations, a fairly stable rate of properties going back to the bank, and a metric ****load of postponements. So that red line is going higher and higher. As of today, we have 146 unresolved trustee sales, which is actually down a little bit.

One of the things I've mentioned on a couple of Monday mornings in recent weeks was a growing backlog of unlisted REO inventory - properties that had gone back to the bank, but hadn't yet been put on the market. There's always going to be some backlog of these. In some cases we see properties get listed within a couple of weeks of the foreclosure date, but in some cases it takes months. We had seen that backlog grow to the mid-60's a few weeks ago, but it's back down to about 60 today, which is kind of on the high end of the normal range. We'll probably start to see some more inventory coming out of that over he next few weeks, and in fact, we probably already have seen some increase in listings from it. That's probably a good thing.

At some point, as I've said before, those unresolved trustee sales are going to resolve one way or another. Some of them are going to cancel, but most of them are probably going to go back to the bank and get listed as REO's. It's not going to happen overnight, and there aren't enough of them at this point to reset the market. The thing to watch moving forward is the active sales line on the chart. If it flattens out, or starts to trend down, it might be a sign that the tides will change, and short sales will probably start to take a bigger share of the market until values increase. If it keeps moving north, then we're probably in the REO market for a good while longer.

Monday Morning Numbers 11/16/09

Good morning everyone! Last week was as crazy as we anticipated, and this week looks to be another one. Hey, if I want stability and a predictable schedule, I need to go find another job. I can't even fathom doing that anymore...

Let's look at this week's market stats:

Active Listings: 59
Contingent Listings: 59
Pending Listings: 55 (31.8% of the inventory)
New listings: 10
Months of inventory: 3.6
Click here for an updated price per square foot chart.

No big changes this week from last week. It looks like our backlog of unlisted REO properties is continuing to grow, which probably indicates that we should see new listings increase in the coming weeks. It's been a couple of months since I updated REO activity, so I'll do that later this week for my "Focus On" post.

Focus On Mission Hills

It's time to take a look at our activity in one of our entry-level areas, Mission Hills. For a little background on the area, check out the first post I did on the area earlier this year.

Most areas in our market have been thin on inventory, and this area is razor thin at the moment, with one lonely active listing at the moment, a traditional seller. If you want to take a flyer at putting in a backup offer on a contingent listing in the area, you have two of those to choose from, both short sales. Waiting for the "tidal wave" of REO listings to shake something loose here? I hope you're patient - we only have two unlisted REO properties, and five unresolved Trustee's Sales in the wings.

Because there haven't been a lot of listings to sell this year, the sales activity has been tepid at best. We have 4 pending sales in the area right now, 3 REO's and 1 traditional seller. And that's exactly the same number for our three month sales: 3 REO's and 1 traditional seller. Such beauty in the symmetry...

Last time I covered this area, I had noted that it looks like values have been holding, and that still appears to be true. This area remains the bargain entry into some school districts that are well regarded, and these homes rent well, which make them attractive to investors. If inventory remains this low, and it looks like it probably will for a while, we should see some very stable, and perhaps slightly appreciating values here in the coming months.

Monday Morning Numbers 11/9/09

Good morning! We had a rare weekend off (more or less - it's kind of hard not to work at all in this profession), which is good, because we're looking at what promises to be a crazy week ahead. Let's take a look at our market numbers this morning:

Active Listings: 61
Contingent Listings: 55
Pending Listings: 55 (32.2% of the inventory)
New listings: 9
Months of inventory: 3.5
Click here for an updated price per square foot chart.

The number of active listings went back up a little bit this week, so our inventory is a little less anemic than it was last week. It's still incredibly low, and we didn't exactly have a big influx of new listings.

Later this week I'll take a fresh look at Mission Hills activity.

Focus On Newer Construction

Another crazy week, so here I am pushing off my "Focus On" post to the weekend again...

This week we're due to take a look at the activity on newer homes. As a refresher, what I mean by "newer home" is a house (not including condos) built in 2000 or later. I'm only including resale homes in this category, so homes that are being sold by the builders are excluded.

Most of these homes were sold at or near the peak of the market, back in the days of easy credit. So not surprisingly, the big bulk of these resales are distressed properties. Our inventory has been thinned out pretty much across the board, and these homes are no exception. We only have 3 active listings at the moment, 2 short sales and a traditional seller. We have 5 of them in contingent status, 4 short sales and 1 REO.

Sale activity has been pretty good on these units. We currently have 6 pending sales, with 3 REO's, 2 short sales, and one traditional seller. Over the past three months, we've had 8 sold units, with 5 REO's, 2 short sales, and 1 traditional seller.

On limited data points, it appears that these prices have been pretty flat for the past several months. These homes are above the price level that is our most active, but they do tend to sell pretty quickly. These types of homes used to be almost all move-up buyers, but those types of buyers have been rare in this market, so what we're seeing more of now is first time buyers with somewhat higher incomes buying these homes. The general rule of thumb is that newer homes hold their value better in down cycles, and appreciate better in up cycles, and that's probably going to be true here. I expect that when we start to see appreciation, these homes will do better than the market average.

Monday Morning Numbers 11/2/09

Good morning everybody! I started fighting a cold in the middle of last week, so I'm working on getting out of my NyQuil coma with an extra cup of coffee this morning. So far the NyQuil is winning. That's some evil stuff. But if you want a good 12 hours of sleep, it's your ticket to La La Land. Anyway, let's look at some numbers:

Active Listings: 54
Contingent Listings: 58
Pending Listings: 60 (34.9% of the inventory)
New listings: 4
Months of inventory: 3.5
Click here for an updated price per square foot chart.

Inventory continues to slide a little bit, and we saw a handful of closings at the end of the month, which is pretty typical. Our unlisted REO properties are up to about 59 today, which is on the high side of normal, so I wouldn't be surprised if we start to see new listings increase a little in the next couple of weeks.

Later this week I'll cover activity on newer homes.

Focus On South Vandendberg Village

Continuing with my ongoing series of posts about market conditions in various geographical areas within our market, I'm moving on to South Vandenberg Village this week. What we're talking about here are houses in Vandenberg Village on the south side of the highway, not including condos or the newer homes at Providence Landing (those get covered elsewhere).

In the last couple of South Village posts I had noted that there was next to nothing on the market in the area. That hasn't changed. We have two - yes, you read that right, two - houses on the market as I write this. One is an REO, and the other is a seriously overpriced house with a relocation company. This area isn't inventory-thin, it's inventory-anorexic. We don't have any contingent sales here at the moment.

We do have 4 pending units on the market right now. Three of them are REO's and the other one is a traditional seller. Interestingly, the three REO's took a while to get into escrow - on average about 50 days. That's a lot longer than our market average, especially for an REO. But the traditional seller was in escrow in 8 days.

We've only had one sale up there in the past three months. That one was a short sale. It was a nice unit on a perimeter lot with some views, and it got a little more than I might have thought, which is probably a good sign for the neighborhood. If we had a little more data, I'd have a stronger opinion about price trends here, but on the whole, I think that it's probably been stable, and possibly appreciating a little bit.

Monday Morning Numbers 10/26/09

Hey, wasn't I just here? Well, I'm back to take a look at our Monday market stats:

Active Listings: 57
Contingent Listings: 61
Pending Listings: 65 (35.5% of the inventory)
New listings: 4
Months of inventory: 3.8
Click here for an updated price per square foot chart.

If you've been reading this blog regularly, you might remember about six months or so ago that I made note that the number of listings under contract (combined contingent & pending) outnumbered our active listings. It's been that way ever since, and as of this week, we now have twice as many listings under contract than we have active listings.

Chew on that for a second. I'll wait.

OK, a couple of other numbers of note in here: 57 active listings? Are you kidding me? It's getting to be like the limbo - "How low can you go, mon?" And for the first time in this cycle, we are under 4 months of inventory. And that's counting the contingent listings as active (which is technically true). If I take those out and just look at active listings, it's 1.8 months.

Anybody have a house they'd like to sell? This market needs some inventory.

Focus On North Vandenberg Village

Here we are on Sunday night, and I haven't gotten to that blog post yet. Hey, as long as I get it done before Monday morning, I'm OK, right? This week we're back to our area updates with an update on activity in North Vandenberg Village.

We currently have 8 active listings in North Village. Given that our inventory is razor thin, this is actually a little surprising. More surprising - 6 of these are traditional sellers, with one each short sale and REO. I don't know what to make of that... We also have 2 contingent listings up there, both short sales.

There are 5 pending listings here at the moment. And much like the active inventory, it's dominated by traditional sellers with 4 of those, and one REO.

Sales have been a little slow in the area with only 4 over the past three months. In contrast to the numbers above, three of these were distressed sales - one short sale and two REO's. There aren't really enough sales here to form an opinion on price trends, but I'm hoping that by the next time I come back to this area for a post, there will be some more data to work with.

See you back here in, oh, about 12 hours for the Monday thing.

Monday Morning Numbers 10/19/09

Good morning once again, and welcome to yet another scintillating edition of Monday Morning Numbers! Seriously, you just can't get this kind of excitement anywhere else, short of getting glued to your television to watch a helium balloon float through the sky for an entire afternoon. I'm really happy that I hardly ever turn on the TV during the day. Let's look in on what our numbers for the week:

Active Listings: 64
Contingent Listings: 63
Pending Listings: 63 (33.2% of the inventory)
New listings: 9
Months of inventory: 4.0
Click here for an updated price per square foot chart.

Inventory continues to slide. I was just astounded a couple of weeks ago when we dropped below 70 active units, and I figured it was just a blip that would correct. It still might be that, but we actually dropped still lower this week. Now I'm wondering if we'll go into the 50's or even lower.

Come back later this week for an update on what's been happening in North Vandenberg Village.

2009 Third Quarter Update

Where does the time go? I woke up one day a week or so ago and realized that this year is over 75% gone. Yikes. At least that means that we're getting football now...

What that means for this blog is that it's time for an update on what happened in our market in the third quarter of 2009. Starting with this quarter, I have a little bit of a change in the data source for at least some of the stats that will follow. A few weeks ago I joined a secondary MLS. I had started to see more and more properties over the past several months that were selling outside of the Lompoc Valley Association of Realtors MLS. We were increasingly needing to scour sites like realtor.com for listings for our buyer clients. The vast majority of these homes were listed in the Central Coast Regional MLS (CCRMLS). So in an effort to get better access to listings for our buyers and to better expose our listings to a larger pool of agents, I ponied up and paid for another MLS membership.

CCRMLS is a regional MLS that combines listings from 7 different local associations on the Central Coast. We do see a lot of crossover in Lompoc listings that are in both MLS systems, but I found that this year we've been seeing about 5 sold units a month in Lompoc that are only listed in CCRMLS. The big bulk of these sales are REO properties listed with out of town agents. This is a significant enough number that I need to track these sales as well, at least for quarterly reports. The weekly numbers are going to remain LVAOR MLS only for now - it's just too cumbersome to try to combine these every week. For the purposes of this report, all numbers are combined between these two MLS systems unless otherwise noted.

So with that piece of boring technical business out of the way, let's get to the numbers. We saw a total of 116 sold units in the third quarter of 2009. This is a drop of about 7% from the same quarter in 2008. It looks a little better in terms of volume than it did in the second quarter. Year to date, we're down about 8% in total sales (combined MLS data), but the number of total listings has dropped by about 27% (LVAOR only).

Prices remained remarkably stable as well as you can see from this updated Price Per Square Foot Chart. Note that I went back and updated the previous data with CCRMLS data, so some of the numbers have changed very slightly from the previous charts that I've published. I've said this previously, and I'll say it again here for the record: I think we're at the bottom of this market cycle. And I think that we'll be relatively flat in terms of prices for at least another year.

The mix of our sales remains very heavily tilted toward distressed properties. 65% of the sales in the third quarter were REO's, and 10% were short sales. REO sales continue to account for a much higher percentage of sales than they do of total listings - around 50%. The short sale number here is somewhat surprising to me, down from 17% in the second quarter. It'll be interesting to see if that was a statistical hiccup, or the beginning of a trend.

Looking at how buyers are paying for their purchases, we saw conventional financing make a bit of a comeback in the third quarter, accounting for 32% of the sales. FHA and VA dropped a bit of their market share at 34% and 13% respectively, and cash purchases were very close to the second quarter numbers with 19% of the sales (these are LVAOR only numbers). The cash buyers are probably nearly all investors, and I think that increased investor activity might also account for some of the increase in conventional financing.

As should be expected in a low inventory/high buyer activity market, we continued to see short market times for properties. The median days on market for our sold units dropped a bit to 26 days from 29 in the previous quarter. Escrow periods remained very close to the second quarter with a median of 41 days.

Looking ahead, a lot of what happens over the coming months is going to depend a lot on what happens with REO inventory. If it continues to come on at the current pace, we'll likely see our inventory shrinking. This could nudge our values up a little bit, but the key in any real price appreciation will be affordability. I've said before that prices dropped well below the point where we had buyers back in the market in a big way, and I think that we found affordability in our entry level market 20% ago. Does that mean that our prices will rebound to a 2Q 2008 level anytime soon? Probably not. I still think that at some point we'll see some more REO inventory. But if our inventory shrinks much more and interest rates stay in the 5% range, we might get a bit of a moderate bump. Stay tuned.

Monday Morning Numbers 10/12/09

Good morning, happy Columbus Day to the handful of you who actually get the day off... Really, outside of government workers and students, does anyone even know it's a holiday? I'm back from the C.A.R. meetings, and I'm not going back to another one until February. They're interesting meetings, and I kind of like them for the first day or two, but then I just want to come home. But I'm there for the duration. Anyway, let's look at this week's vitals for our market:

Active Listings: 69
Contingent Listings: 60
Pending Listings: 58 (31.0% of the inventory)
New listings: 12
Months of inventory: 4.1
Click here for an updated price per square foot chart.

We have a few more pending units and a few more new listings this week, but aside from that, there isn't a lot of change from last week's numbers. We're coming into a period where sales traditionally slow down, so if some of that minor amount of REO backlog starts to come on the market, we might start to see a bit of an increase in our inventory levels in the next couple of months.

Later this week I have a third quarter update on tap. Should be interesting - I can't wait to see what I have to say. Seriously, sometimes I just don't know what's going to come out of my mouth (or keyboard).

Monday Morning Numbers 10/5/09

Here we are again. Another Monday morning, another update on market numbers for the Lompoc Valley:

Active Listings: 69
Contingent Listings: 62
Pending Listings: 53 (28.8% of the inventory)
New listings: 5
Months of inventory: 4.0
Click here for an updated price per square foot chart.

Our inventory level continues to drop sharply this week. Even a few months ago when we started to see this trend, I would never have guessed that we'd be below 70 active units. If things continue at this rate, we might see the number of contingent listings outpace active listings. That's just nuts. It doesn't help that we've had a couple of straight weeks of anemic numbers for new listings, and we're starting to eat through some of that unlisted REO inventory now. We're down to about 45 REO properties that haven't yet hit the market, and we've not been seeing many go back to the bank in recent weeks. We may be looking at this type of inventory level for a few months.

I'm not sure if I'll have a "Focus On" post later this week. I'm doing the C.A.R. meeting thing again up in San Jose this week. What that typically means is that we'll get three or four fires on the business front that need to be put out, and Diane will be scrambling to keep everything together while I'm sitting in meetings. I was lucky to find her long before I got into this business, and now I'm doubly lucky to have her.

And if I say nice things about her on here, maybe she won't change the locks while I'm gone...

Focus on Condos

I've been writing a lot here lately about how our market is stabilizing, and that we might be seeing the beginnings of some small amount of price appreciation in some segments. Condos are a real mixed bag here. We have a couple of complexes that have been holding up pretty well, but some of our larger ones are struggling, for reasons that I'll lay out shortly. On the whole, it looks like our condos sold for around 5% less in the third quarter this year than in did in the second quarter. If you read my last condo post in June, you might remember that I noted that it looked like we'd actually seen the price per square foot of condos jump about 20% from the previous quarter. I said at the time that it was a very small sample size, and it still is. That number is going to fluctuate too much to read much real meaning into it when we're looking at numbers this small.

Let's take a look at the current condo numbers: We have 12 active units on the market today. Of those, 2 are REO's, 7 are short sales, and three are traditional sellers. We also have 12 contingent units, 3 of which are REO's, 8 short sales, and one traditional seller.

We had some pretty good condo sales activity in the last quarter with 17 sales. 11 of those were REO's, with only one short sale, and 5 traditional sellers in the mix. In a market that saw a bit of a drop in overall sales from the same period last year, we actually had a modest increase from the 14 condo sales in 3Q 2008.

As I mentioned above, we have a couple of our larger complexes that are suffering a bit for price. Lompoc Village and Cypress Woods in particular are not holding their value very well at this point. Both of those complexes, along with a few smaller ones around town, are getting to be more and more difficult to buy with financing. Lending guidelines have tightened across the board, but this is especially true with condos. When we started to see the effects of the foreclosure market, a lot of these associations started to have problems with delinquent dues. Underwriters want to know that they are writing loans on properties that will likely be maintained, and when a significant number of owners aren't paying their HOA dues, it gives them pause.

Another reason that condos are getting to be tougher loan candidates is that some complexes have become too investor heavy. There are some tightening loan guidelines out there on owner occupancy ratios, and we're starting to see some of these complexes become nearly impossible to qualify for financing. As a result, we've begun to see an increasing percentage of cash purchases for these units. 7 of the 17 units sold in the last quarter were cash transactions. Cash usually means investor, meaning that at least in the medium term, the ratios aren't likely to get any better.

There's another factor that I think is likely to retard any immediate price appreciation for most condos. One of the truisms in our business is that buyers don't live in the price, they live in the payment. Houses have become so affordable that most of our first time buyers have started to opt for those instead of condos. Think about it this way - most of our larger, nicer condos are probably in the $180K range right now. But they have HOA dues that are usually in the $200-250 range per month. So when you tack that onto the monthly mortgage, you're looking at a payment that would get you into a $200-210K house. That's a pretty decent house these days, so there's a smaller market for condos.

Because of the affordability of houses and the financing issues, I expect the condo market to lag significantly when we do start to see prices move back up. That's not to say that they aren't still a good value. If you're looking to own but don't want all the maintenance that comes with a house, or if you're looking for a good cash investment but you're limited to the $100K range for that investment budget, condos are still a good option. And even though they'll come back more slowly than the rest of the market, rest assured, they will come back.

Monday Morning Numbers 9/28/09

Good morning! It's time once again to take the pulse of our local real estate market while I let my third cup of coffee work on getting my pulse rate up a little:

Active Listings: 77
Contingent Listings: 64
Pending Listings: 47 (25.0% of the inventory)
New listings: 8
Months of inventory: 4.5
Click here for an updated price per square foot chart.

One number in this mix changed significantly this week - we dropped from 56 to 47 pending listings this week, and in terms of both raw numbers and in percentage of inventory, we're at a 5 month low in this category. What happened last week was that we saw a lot of closings. I use a three month sold number to calculate the months of inventory on the market, but I don't report on it directly. That number shot up to 95 this week - a high point for the year - which resulted in the 4.5 months of inventory that you see above. This is the lowest level of inventory that we've seen since probably some time in 2004.

I doubt that we can sustain the level of closings that we've seen for the past couple of weeks for very long with the inventory that we have. Not all of those contingent listings are going to go pending and eventually sell. And like I said a couple of weeks ago in my REO update, we aren't going to see a big influx of foreclosures in our inventory in the short to medium term.

There's one other thing looming that could have a dampening effect on sales. The $8000 first time buyer tax credit is set to expire soon. Buyers need to close by 11/30/09 to qualify for it, meaning that at this point, if they want this credit, they'd better get into escrow on something in the next week or two. And short sales are realistically out of the question for this timeline now (have been for a while). The National Association of Realtors is making a big political push to get this credit extended and/or expanded, but it's anybody's best guess what's going to happen with it. That credit has been a big part of stabilizing the housing market. Write your Senator & Representatives, folks. The declining housing market helped to get us in this mess, and it's going to have to play a key role in the recovery.

That was a longer than usual MMN post. Good coffee, what can I say? Come back later this week for an update on the condo market.

Focus On Short Sales

It's been a few months since I wrote about short sales, so I figure it's about time to check in on that segment of the market to see how things are changing.

Short sales are, in my opinion, here for the long haul. I expect to see some level of short sale activity in our market for 6-8 years. We had a lot of houses sold and refinanced during the boom years, so we have an incredible number of people who owe more on their house than it's worth. I've seen several different national numbers on how many homeowners are upside down, ranging from the 30% range up to around 60%. I suspect that a lot of those numbers are what I like to call "PFA" numbers - "Plucked From Air", or in less polite circles, "Pulled From... well, you know". I'd love to get my arms around what our local number is. I can come up with the number of homes sold in Lompoc from 2004 through 2006, and subtract the number of REO's. But I don't have a good source for refinances, and that's a big part of the picture. If I can come up with a good local number at some point, I'll report on it, and it could give us a clearer picture of how long we can expect this to go on. Bottom line, it's not going to end until we see some significant appreciation.

Anyway, since this is a large and likely long term segment of our market, it warrants watching. If you've been reading my Monday Morning Numbers posts, you'll know that the number of contingent listings has exploded in recent months. And no surprise, this is largely a result of short sale activity. Currently, 46% of our combined active & contingent listings are short sales. This is in about the same range that we've seen all year. What's changed is the mix. Short sales make up a whopping 70% of our current contingent listings, and only 26% of our active listings.

The percentage of pending listings is down from when I last reported on these back in May. Right now, short sales account for about 15% of our pending listings, down from 23%. I think that may be at least partially due to agents leaving them in a contingent status for longer. I can't track it, but it seems to me that I'm seeing shorter times between these listings changing from pending to sold.

We've seen a slight decrease in the percentage of short sales as sold units. Year to date, they account for 14% of our sales, but only 11% of the sales so far this quarter. That number was 17% in the the second quarter, and 15% in the first quarter. But the quarter isn't quite over yet, and it wouldn't take a huge swing late to move that number back in line, and I'd be surprised not to see it back in the 17-20% range in the fourth quarter, given the number of contingent short sales out there today.

One number that continues to change for the better is the success rate of short sales. When I first reported on these, I noted that back in early 2008, I calculated that about 9% of the short sales listed eventually sold, and that had improved greatly over about a year to around 25%. Right now it looks like we have a success rate at around 33% for short sales, compared to 70% for the market as a whole. I think that everybody is getting better at the process. Banks are making some slow progress in getting their acts together, and agents are getting better educated about the process and are doing a better job of managing these transactions.

There is a monkey wrench in the works these days, and I hope this isn't a permanent trend. Increasingly, lien holders are agreeing to release the lien on the property to get it sold, but they aren't releasing the borrower from the debt. If this continues, I think we'll start to see a decline in the numbers of these types of sales, and we'll have a prolonged REO cycle instead. When borrowers see this clause in their short sale approval letter, there are two typical reactions: They hit the wall and decide not to agree to the sale - why bother with it if I'm still going to owe $400,000? The other school of thought (maybe misguided) is to say "Go for it - you can't get blood from a stone". Either way, I hope this practice dies an early and quiet death.

Bottom line, like I said earlier, if you're looking for a home in Lompoc right now, you limit your already limited options by excluding short sale listings. There are legitimate reasons to avoid them, depending on what you are trying to accomplish. But even with the pitfalls, more buyers are going that route. It's not quite the hopeless mess that it was a couple of years ago.

Monday Morning Numbers 9/21/09

Good morning once again, and welcome to another exciting edition of Monday Morning Numbers. It occurs to me that our website is starting to get a little more traffic these days - a good thing for us - and I might have a few new folks looking at this blog. If you're new to the blog and you're having a hard time making sense of these numbers, check out my first MMN post for some explanations.

Ooohhh, I just coined myself a new TLA (Three Letter Acronym). How very self-indulgent... Enough of that, let's get to the numbers:

Active Listings: 78
Contingent Listings: 64
Pending Listings: 56 (28.3% of the inventory)
New listings: 12
Months of inventory: 5.1
Click here for an updated price per square foot chart.

In terms of raw numbers, we're at our lowest point in this cycle for active listings. Given what I wrote last week about upcoming REO inventory, I would expect that to drop even a bit more in coming weeks. But because our contingent listings grew by quite a bit this week, our months of inventory number went up a little bit. We crossed over an interesting threshold this week - we now have more contingent than pending listings. It's primarily due to the increasing role of short sales in our market, as those tend to move into contingent status once they have an accepted offer, and they stay there for quite a while in some cases.

And on that note, I suppose I should do another short sale update later this week. Come back for that on Thursday or Friday. Or maybe Saturday. It depends on what gets thrown at me this week.

Focus On REO Activity

It's been a couple of months since I updated you specifically on REO activity. I did a brief presentation on some numbers for our MLS marketing meeting last week, and I thought that I'd cover some of that here for the general public this week.

For today's post, I primarily want to cover what we have coming down the pipeline. But first, a little refresher. Unless you've been living in a cave without any media sources for the past couple of years (lucky you), you'll know that REO's are dominating the real estate markets in most of the country these days. That's certainly true in our area - about 61% of our sales so far this year have been REO properties. So having an idea of what's coming in that arena is one of the big keys to knowing what's in store for us in the coming months.

I made up this chart to illustrate the trends in our REO activity. It's a little confusing and a little busy, but it shows graphically what the various stages of the process have looked like over the past couple of years. The trend lines on all of these indicators has been up somewhat over the 32 months covered in this chart, but most notably, the active auction number (the red line) has been going up pretty dramatically in the past few months. Except for August - I don't know what's going on with that. We haven't seen a decrease in unresolved NTS filings (around 125 today), so I suspect that's just a fluke. We'll probably see that number go back up this month.

As of right now, I can account for about 51 unlisted bank owned properties in the Lompoc Valley. That number has fluctuated a little between 50 and 65 over the past several months, as you may know if you've been following this blog. It's on the low side right now, and because the last couple of months have been relatively slow in the numbers of properties going back to the bank, I'm thinking that we'll see that drop a bit more. As I mentioned above, we're at 125 unresolved NTS filings. This is a high point since I've been tracking it. What's been happening with most of these sales is postponements, usually several times. I don't know if that's because banks are working on avenues with more borrowers to prevent the foreclosure, doing things like loan modifications or short sales, or if it's because they're overwhelmed on a national level and they just can't process things in a timely manner. It's probably a little of both. We have seen more cancelled sales in the past month or two, and a lot of the ones I see are properties that went through the short sale route.

A couple of months ago, I said that I thought that we'd see a bit of an increase in our inventory after we had a couple of active months of REO sales. As it turns out, not so much. We got a small bump for a while in June & July, but we're back down in the 80-90 range again. We did get some additional listings, but our demand is still very strong. Properties, especially houses under $200,000, don't tend to hang around on the market these days.

At some point, most of those unresolved NTS filings are going to turn into REO's. Not all of them will, and they won't all come on at once. I've been saying this for months now - we aren't going to see a "flood" of REO inventory in our market. If you're waiting for that before you decide to jump on a purchase opportunity, you might well miss out on one of the best bargain markets in recent memory. You're waiting for the bottom? I think we're here.

Monday Morning Numbers 9/14/09

Good morning once again, and Happy Football Season! I love that first weekend of NFL action. It's like Christmas for me. Except that after watching that Bears game last night, I felt like that shiny package that I thought was going to be something really cool turned out to be a pair of socks...

Anyway, let's get after some numbers:

Active Listings: 83
Contingent Listings: 57
Pending Listings: 57 (28.9% of the inventory)
New listings: 10
Months of inventory: 4.8
Click here for an updated price per square foot chart.

You know, I basically just go in and copy and paste these from the previous week's post every Monday and just change the actual numbers. This week, I didn't even have to change many of the numbers. We have a few more active listings, and not a lot of new listings this week. Note that I've pulled the price changes out of this report this week. It's not a good indication of activity on a weekly level. I am still tracking it, and I'll report on it periodically.

Later this week I'll update REO activity, with an eye toward what might be in our future.

Focus On Mesa Oaks & Country Club

Crazy week - I almost didn't get one of these done this week between travel, working for clients, and working on the new rental property. Let's go back and take a freshened up look at our "executive" communities in Mesa Oaks & the Country Club. I covered these a few months ago, so go check out that post for some background and community descriptions.

We have 13 units on the market in these areas this evening, a slightly lower level of inventory that we had when I reported on them in May. As was the case then, there aren't a lot of distressed properties here - only one short sale and two REO's. In addition, there is one contingent unit here, a short sale that is awaiting lien holder approval.

We only have 3 pending units here at the moment, one short sale, one REO, and one new construction unit. We've seen 7 sold units up there over the past three months, which is very robust activity for the area. Of the sold units, 2 were REO's and 2 were short sales. That's a bit more distressed property than we've been seeing up there, and that might account for some of that increase in sales activity.

At this point, it looks like prices are pretty stable in this area, and we may possibly be seeing some appreciation - but as I've said before, this is working with a very small set of data points. I expect that this area will do pretty well when we start seeing things bounce back.

Next week should be a little calmer (as I tempt fate), so hopefully I can get a focus piece done a little earlier in the week. I might go back and hit REO's again - I have some charts and data that I put together for a presentation to our real estate community last week that might shed some light on what's coming down the pipeline.

Monday Morning Numbers 9/7/09

Hope everybody out there is having a great holiday weekend and sending summer out in style. It's chili day at our house. I make chili about once a year anymore, because I'm kinda hardcore about it. No cans are opened when I make chili. Everything from scratch. It's an all-day event. But it's worth it, and we freeze a bunch.

Anyway, let's look at some numbers:

Active Listings: 79
Contingent Listings: 57
Pending Listings: 57 (29.5% of the inventory)
Price changes for the past week: 5 (3.7%)
New listings: 11
Months of inventory: 4.7
Click here for an updated price per square foot chart.

The numbers are still pretty much in line with what we've been seeing. I should note that our months of inventory is at the lowest point that I've seen since I started tracking this stat.

I'll figure out the topic for later this week when I get there. I have a lot of chopping to do today.

Adventures In Home Buying

If you've been checking in on this blog over the past few weeks, you know that Diane & I just bought an investment property for ourselves. What a long, strange trip it's been...

This all started for us early this year when we decided that we needed to re-align our investments. Like a lot of folks, we had seen our portfolio take a nasty beating late last year, and while we aren't exactly risk averse - I mean come on, we're Realtors - we did think it was time to re-think where we had our nest egg. And in talking about it, we thought that we were at or near the bottom of the housing market, and we really didn't want to miss out on a prime opportunity.

The problem was, everybody else out there is trying to buy real estate too. I guess that's not really a problem - we benefit from that. But now we found ourselves in a position where we would have to compete for a good property. You'd think that it would be easier with the inside track, and it probably was to some extent. But we had some pretty limiting factors in what we were willing to buy. It had to be something in a decent area. It had to be something that could bring us somewhere in the neighborhood of $1300 a month in rent. And it had to fit our investment budget, after any repairs that needed to be done. Easier said than done.

Down To the Courthouse

After looking at what we had on the market at the time (February) and realizing that this was going to take some time and patience, we decided that we'd expand the search to trustees' sales down at the courthouse steps. This took a lot of research, and a lot of trips down to the courthouse in Santa Barbara. In a nutshell, this approach is not for the faint of heart. Here's how it goes:

First and foremost - it's cash or cashiers checks, right then and there if you buy a property. No loan, no inspections, no title insurance, no cooling off period, nothing of the sort. As is, where is, you pays your money and you takes your chances.

You have to do a lot of your own research on the property ahead of time (unless you feel really brave). We targeted a whole bunch of properties. We didn't count, but I'd be surprised if it was under 100 over a period of time. We would drive by them, make notes on the exterior condition, see if it looked occupied, and decide if we wanted to do further research. If they were occupied, we tried to steer clear of them as much as possible. There were a couple that seemed to have enough potential to deal with that situation, but it would factor in to the bid we were willing to make.

If it made the cut, we'd go to the county recorder's office and check out the history on the property liens. This could sometimes be a time consuming process, but sometimes it was pretty clean and straightforward. Basically, what we were trying to do was figure out if the trust deed that was foreclosing was in first position. If it's not, you're buying the property subject to any senior liens. This could be a huge problem. And while we got to be pretty comfortable with the data we found, there was always the potential of title problems that we couldn't identify with our search.

If you want to minimize your risk on one of these, you should have a title report run on the property up front. But the problem is, this is a numbers game, and those reports aren't cheap (around $300-500). If you only have one or two properties that you're going to chase, that's one thing. But your chances of getting one of those is very slim. First of all, in most cases, you don't even know what the opening bid is going to be, or even if the property is actually going to be sold, until the actual auction. This was especially true early on in our adventure. Over a period of a few months, it seemed like we started seeing more data on auctions, usually on the morning of the auction. But even then, it's not like you can get the details on something in the morning and get a title search done by 1:00. So there's that risk factor again.

Most of the time, auctions get postponed. On a few occasions, we actually got to the point of bidding on a property. A couple of times, the bank actually bid against us (sort of a reserve bid) and they went higher than we were willing to go. Another time, we were outbid by another bidder. A few other times, we went down hoping to bid on a property, but they were postponed at the last minute. The whole thing was an exercise in patience, to say the least.

The Payoff

If things hadn't worked out the way they did, we'd probably still be parked at the recorder's office looking at trust deeds. But as it turns out, the property that we wound up with was listed as an REO. It was actually a property that we had looked at as a potential pickup at auction, but because it was occupied at the time and there were a couple of questionable things in our research, we decided not to pursue it. It reverted back to the bank, and came on the market in pretty short order. We saw it come on the MLS on the Friday morning before we left on vacation. We went over to see it at lunch, and decided to go ahead and throw an offer at it.

One advantage that we do have from being in the business is flexibility of schedule, and it takes us almost no time to crank out an offer. So we got it off to the listing agent that afternoon, and she promptly got back to us and let us know that she had a couple of other offers already. So much for that advantage... But at least we figured we could leave town on vacation and not worry about this while we were on the road.

So we leave for our vacation on Sunday, a nice leisurely drive up the coast for the first few days, and on Sunday afternoon, after a long stretch of road where there was no cell service, both of our phones start beeping at us with messages. Turns out, it was the listing agent. Kind of a surprise, being a Sunday, but she had heard back from the bank that afternoon, and they wanted to counter our offer, but only on escrow length and inspection period. We told her to let them know that we were OK with that. So Monday rolls around, and we get a call that the contract is in our email. So we track down a Kinko's and print it out, review it, sign it, and fax it back. Then over the next couple of days, we get a few more details here and there dealt with in between sightseeing. It all came together pretty smoothly, thanks to the miracles of modern technology, and we came home, did an inspection, ironed out a couple of minor things on the title report, and closed it.

The house need some love. It looks pretty good from the street, but once you open that front door, it's a different story. We're in the process of getting some work quoted and done, and we're hoping to have it rental ready by October 1.

Oh - added bonus: It came with a few mature tomato plants. They hadn't been watered much for a while, and a couple of them aren't coming back, but I've been nursing them along, and we'll probably double our tomato harvest this year.

That's some expensive salsa...

Monday Morning Numbers 8/31/09

Good morning! Hope everybody stayed cool in that "heat wave" we had for a few days. I have to tell you, as an old Midwestern transplant - y'all don't know anything about extreme weather. But I have to confess - I was doing some yard work on Saturday, and I got to a point where I just said "Enough!" and came back in the house. Living in California for 27 years has made me a wuss. Anyway - let's get some numbers for the week:

Active Listings: 82
Contingent Listings: 54
Pending Listings: 61 (30.1% of the inventory)
Price changes for the past week: 13 (9.6%)
New listings: 9
Months of inventory: 5.0
Click here for an updated price per square foot chart.

Our inventory level is down a bit again this week. And we had a lot of price changes last week, but that number fluctuates a lot. I report on price changes weekly, but I may take that out of the weekly numbers soon. I'll keep tracking it, but start reporting on it quarterly. I think that it's a good market indicator over a longer period, but on a weekly basis, it's just about useless.

We closed on our investment purchase last week! We've got a lot of work to do (well, let's be honest, to pay for) in the house, but we're excited about the deal we were able to get on it, and it's going to be pretty cool to see this house with a face lift. I think that unless something else interesting comes to mind, I'll work up a post on our whole investment property search and purchase later this week.

Focus On North Lompoc

We're continuing our series of area updates this week, with a refreshed look at activity in the north end of Lompoc. I first posted on this area back in April, so go check out that post for a definition of the area.

Like most areas in town, the north side of town is thin on inventory. We only have 6 active listings here today, and all but one are distressed sales (2 REO's and 3 short sales). In addition, we have 20 contingent listings (4 REO's and 15 short sales). We also have 9 pending units in the area (5 REO's and 2 short sales). This is just crazy, upside down stuff. We've had a bit more inventory under contract than active for a few months, but we're looking at almost a 5-1 ratio here.

Sales activity has been pretty steady here, with 16 sold units in the past three months. Of those, 8 were REO's, and 3 were short sales. When I looked at this area a few months ago, almost all the sales were REO's. That was kid of a fluke, and these numbers look a little closer to what we see in the market as a whole.

Looking at the sales in the area, it appears that we're tracking pretty closely to the market trend of flat prices this year for most areas. In fact, on an admittedly very small sample size, it appears that we may be seeing some increase in values here in some segments, but let's not get too excited yet. When you deal with numbers this small, strange things can happen.

See you next week when I cover... Well, I'll figure that out next week.

Monday Morning Numbers 8/24/09

Good morning once again! Time for another exciting edition of Monday Morning Numbers.

Active Listings: 89
Contingent Listings: 54
Pending Listings: 57 (28.5% of the inventory)
Price changes for the past week: 4 (2.8%)
New listings: 5
Months of inventory: 5.4
Click here for an updated price per square foot chart.

Most of the numbers changed slightly, but not a lot this week. Except...

Five new listings for the week? Are you kidding me? I'm guessing that this was just one of those flukes that we see now and then. If we see even a couple of weeks like that, our inventory will drop pretty quickly back into the 70's.

Later this week, I'll update North Lompoc. And if anybody is interested - our purchase should close in the next couple of days. We've had a good, responsive escrow office on it, and we would have probably closed it on time, but we've had to work on a couple of items on the title report. Even the "easy" deals seem to have a challenge or two along the way these days..

Focus On Central Lompoc

Back into the groove of writing area-specific posts...

I first covered Central Lompoc back in April. Go have a look at that article for some specifics on what the area encompasses and a description of the homes there.

Central Lompoc is probably the most inventory-heavy area in our MLS at the moment. We have 17 active listings in this area as of today. 5 of these listings are REO's, 7 are short sales, and a surprising 5 are traditional sellers. Another oddity among the active listings in here - 5 of them are pre-1950 construction.

In addition to the active listings, we have 9 contingent listings on the market in the area. The bulk of these - 6 - are short sales, with 2 REO's and 1 traditional seller. These look a little more like the mix I would expect to see for the area, with one older (1903) house, one newer (1982), and everything else pretty much in the 1950's and 1960's.

We also have a big old pile of pending sales in the area, with 16. These are dominated by REO's, with 11, with 3 short sales and two traditional sellers,and again, we have a pretty typical mix of property ages here. And (no big shock) it's been a very active area in terms of sold units over the past three months, with 26 sales. Again, REO's have the bulk of these (18), with 5 short sales and 5 traditional sales mixed in.

Prices in the area appear to be very flat for the year, in line with the rest of the market. Considering that it appears that this area has accounted for around 30% of the sales in our MLS over the past few months, this isn't terribly surprising.

Next week I'll work on North Lompoc, and if I get some time, I'll work up a post about our experiences with trying to buy a house at the courthouse steps. That one might be entertaining...

Monday Morning Numbers 8/17/09

We're back! Great vacation - nice little road trip through parts of California that I'd never seen. I think that we may have found a couple of good little out of the way destination spots for 3-4 day getaways some time. It doesn't look like much has changed in the market numbers in our absence:

Active Listings: 94
Contingent Listings: 52
Pending Listings: 58 (28.4% of the inventory)
Price changes for the past week: 6 (4.1%)
New listings: 13
Months of inventory: 5.4
Click here for an updated price per square foot chart.

Notice that I've moved the months of inventory into the weekly numbers above. Some weeks I forget to mention it, and in a real head slapper moment, I figured "why don't I just put it up there with the rest of the numbers?". Sometimes my forehead gets a little red from that kind of thing...

One of those pending listings is ours - in case you didn't see last week's post, we've opened escrow on an investment property. Very exciting stuff. It's a bank-owned property, and it's a little rough, but we figure that we'll have it rental ready by October 1. Anybody know someone interested in renting a good 3 bed/2 bath house in a nice South Side neighborhood?

Go on - ask me...

Crazy days on the road - having a great road trip vacation. No "Focus On" post this week because, well, we're ON VACATION.

But that doesn't mean we aren't doing a little work...

One of the things that comes with working in real estate is that you're always getting questions, mostly about the market. Sometimes I think that talking about real estate is the national pastime of the Bear Republic. So anyway, for anyone who is inclined to ask me what I think about the market - here's my answer:

We're buying a house.

We got back the signed contract on an REO today, and if all goes according to plan, we'll close on it at the end of next week. It's an REO with an out of town escrow, so place your bets... In fairness, this escrow company (Freedom Escrow in Newport Beach) seems to have been on top of it so far. It could happen.

Diane & I have been looking for an investment property for about six months now, both in the normal "retail" (listed in the MLS) market and at the courthouse steps. The trustees' sales at the courthouse steps has been one of our more interesting experiences this year, and one day soon I'll post about it. But in the end, we found our investment property in the MLS.

So anyway, bottom line here - I think that there's a real good chance that we're at the bottom of the market, and we'd hate to be looking back 5-10 years from now and knowing that we could have done this and missed out. So we're putting our money where our mouth is.

We're buying a house.

Monday Morning Numbers 8/10/09

Greetings from Santa Cruz! We're on the front end of a jaunt up the coast and across the northern swath of the Golden State. Took a nice walk this morning through a cool older residential neighborhood here. We saw something kind of interesting along the route. Seems like lots of folks here like to plant gardens in their front yards. Kinda cool - must be a local thing. Anyway - what's that got to do with Lompoc real estate? Let's look at this morning's numbers:

Active Listings: 92
Contingent Listings: 52
Pending Listings: 61 (29.8% of the inventory)
Price changes for the past week: 4 (2.8%)
New listings: 12
Click here for an updated price per square foot chart.

Another week with some pretty similar looking numbers from the previous week. It does look like the inventory leveled off bit again, and pending listings are on the rise. And that's enough of that - we're on vacation, and Diane said to get off the #$&@ computer. Today we head up to Point Arena.

Focus On South Side Lompoc

Let's take a look at activity on Lompoc's South Side. I did a post on this area back in April, so check that out for a definition of this area, and a description of the homes here.

The South Side has been a pretty active area in recent months. As of this evening, we have 7 active and 4 contingent listings in this area. REO's currently have a somewhat disproportionate share of the active listings. 4 of the 7 active listings are REO's, one is a short sale, and 3 are traditional sellers. Of the 4 contingent listings, 2 each are REO's and short sales. We only have 3 pending sales here at the moment (probably soon to change with at least a couple of the contingent listings). 2 of the pending listings are REO's and the other is a traditional seller.

We've had more sales in this area over the past few months than you might expect from what has been a slower quarter for sold units in our market as a whole. We've had 12 sold units here over the past three months. To put that in perspective, we had only 7 sales here in the previous three months, which was a more active time in the overall market. Of the 12 sales in the past three months, 8 were REO's. That's a bit more than the market average, but not enough to call it a significant difference. Two were short sales, and the other two were traditional sellers.

In looking at what sold over the past few months in this area, it sure looks like we've had a lot of really rough homes selling for cheap. There was one that sold for $100,000 that was badly in need of a heck of a lot of work, to include some foundation repair. Because we've had so many of these types of sales recently, and we had so few data points in the previous period, it's hard to get a read on values in the area. I think that the trend continues to be pretty flat, and probably will remain so with the rest of our market.

There probably won't be a Focus On post next week. We're heading out for a road trip adventure - Diane & I haven't really traveled for pleasure in what feels like a really long time, so we're due for a break. I'll probably still get out a Monday Morning post, but I may have to sneak it in while the boss is in the shower...

Monday Morning Numbers 8/3/09

Good morning, and welcome to another exciting edition of Monday Morning Numbers. I didn't get a second post out last week. I'd tell you some wild and exciting tale of alien abduction and how I had to thwart a massive invasion of Earth, but that would be mostly untrue. If it happens again this week, I'll make sure to take my laptop along. Anyway, let's take a look at what's happening in our real estate market this week:

Active Listings: 94
Contingent Listings: 52
Pending Listings: 58 (28.4% of the inventory)
Price changes for the past week: 9 (6.2%)
New listings: 14
Click here for an updated price per square foot chart.

Another week looking a lot like the previous week - some very slight variation in numbers, but it looks like the trend of slightly increasing inventory has stalled for now, and a few more homes are pending than last week. We have 5.9 months of inventory this morning.

A quick update on the foreclosure front: After a couple of months of increased foreclosures, we saw the number of homes taken back by the banks drop t0 25 last month. We seem to be back in a cycle of most of the trustee sales getting postponed again. As a result, we're back down to about 53 unlisted REO properties after a slight uptick a month or so ago, and we're up to about 120 unresolved trustee sales. If that backlog keeps shrinking, we may see another sight dip in our inventory levels in the next couple of months. But at some point, most of those unresolved sales will become REO inventory, so that will boost the inventory a little while after they start going back. I keep hearing about how we're going to be up to our ears in REO's later this year. I don't think so. Maybe up to our ankles...

Anyway, check in later this week, and alien overlords willing, I'll update activity on the South Side.

Monday Morning Numbers 7/27/09

Here we are on Monday morning once again, and all is right with the world. The Cubs took possession of first place in the NL Central yesterday, which makes me a very happy boy. Yeah, yeah, I know, it has nothing to do with Lompoc real estate, but some things just have to be celebrated. Let's take a look at something that does have something to do with our market:

Active Listings: 97
Contingent Listings: 57
Pending Listings: 53 (25.6% of the inventory)
Price changes for the past week: 3 (2.0%)
New listings: 13
Click here for an updated price per square foot chart.

It looks like our inventory is heading back up a bit, as I've been expecting. It probably has a little further to climb, and then I expect to see it level off again. Foreclosure activity has slowed again, at least for the time being, which should keep the active listings down a bit. We are at 6.5 months of inventory this morning, which is a high point for the year so far.

The "Focus On" post later this week is TBD. I might go back to a neighborhood update, or I might come up with another idea. Go Cubs!