This week, let's take a look at our activity in the north end of Lompoc. First, let's define what that area encompasses. Our MLS defines North Lompoc as the area north of North Avenue up to the river. Like the other sections of town, it also breaks it down to east and west along H Street, but for our purposes in these reports, I'm going to combine them, as I did with South & Central Lompoc earlier. And if you've been reading these, you know the drill - I'm looking at condos as a separate market segment, so I'm not including them here.
North Lompoc has a mix of 1960's construction along with homes built in the 1980's and 90's. The newer homes are mostly segregated into several tracts that all sprung up together, a few with HOA's. There are a very few homes in this area that were built before the boom period of the early 60's, but it's rare to see one come up for sale. There is a little bit of multi-family housing in here as well, but not nearly as much as in the central part of town.
This morning we have 9 active and 8 contingent listings in this area. Three of these listings are REO's, 14 are short sales, leaving one lonely "traditional" seller trying to get his home sold right now. We have 8 pending sales in here, 4 of which are REO's and 2 short sales, leaving 2 traditional sellers (see - I can do math!).
We've had decent activity in North Lompoc over the past few months with 17 sold units. However, almost all of those - 15 - were REO listings, and no short sales have closed here this year. In 2008, we had 76 sold units in this area, 46 of which were REO's (60.5%) and 8 short sales (10.5%). This tracks pretty much with the market as a whole.
It looks like the changes in home values here track very closely to the broader market as well. We've lost around 21% in value over the past year and about 49% from the peak of the market, both very similar numbers to the entire Lompoc Valley market. My best guess is that because we have a good mix of ages of homes in here, we'll probably see this area recover at about the same rate as the entire market.
Next week, I'll turn the focus onto our upper end neighborhoods of Mesa Oaks & Country Club homes.
Thursday, April 30, 2009
Monday, April 27, 2009
Monday Morning Numbers 4/27/09
Good morning - time once again for our weekly look at market stats:
Active Listings: 100
Contingent Listings: 37
Pending Listings: 43 (23.9% of the inventory)
Price changes for the past week: 7 (5.1%)
Click here for the up to date price per square foot chart.
That dip in our active listings last week might have been a short term thing, but we'll have to keep an eye on it. After seeing our pending listings drop off for several weeks, we've started to see a rebound in recent weeks. Buyer activity remains strong, and multiple offers are more and more common on well priced properties. We have about 5.6 months of inventory on the market this morning.
I haven't done this for a little while - let's take a quick look at the makeup of our combined active and contingent inventory. 26 of the listings (19%) are REO's. This is a bit lower than the 20-25% that we've usually seen. This is probably because these listings tend to be priced aggressively and they don't stay on the market for long. 64 0f our listings are short sales (46.7%). These make up the bulk of our contingent listings - 28 of the 37 contingent listings are short sales. This isn't surprising, these tend to sit in a contingent status for a long time while they await lien holder approval. For instance, we have a buyer who has been working on a short sale for a little over two months, and we just got approvals on it last week and it went into pending status.
Come back later in the week for a look at North Lompoc activity.
Active Listings: 100
Contingent Listings: 37
Pending Listings: 43 (23.9% of the inventory)
Price changes for the past week: 7 (5.1%)
Click here for the up to date price per square foot chart.
That dip in our active listings last week might have been a short term thing, but we'll have to keep an eye on it. After seeing our pending listings drop off for several weeks, we've started to see a rebound in recent weeks. Buyer activity remains strong, and multiple offers are more and more common on well priced properties. We have about 5.6 months of inventory on the market this morning.
I haven't done this for a little while - let's take a quick look at the makeup of our combined active and contingent inventory. 26 of the listings (19%) are REO's. This is a bit lower than the 20-25% that we've usually seen. This is probably because these listings tend to be priced aggressively and they don't stay on the market for long. 64 0f our listings are short sales (46.7%). These make up the bulk of our contingent listings - 28 of the 37 contingent listings are short sales. This isn't surprising, these tend to sit in a contingent status for a long time while they await lien holder approval. For instance, we have a buyer who has been working on a short sale for a little over two months, and we just got approvals on it last week and it went into pending status.
Come back later in the week for a look at North Lompoc activity.
Thursday, April 23, 2009
Focus On Central Lompoc
We're going back to looking at a specific area this week after a couple of weeks of looking at other topics. This week, let's take a look at what's happening in the central part of town. When we talk about Central Lompoc, we're hitting the area between Ocean and North Avenues. Our MLS divides it into Central East and Central West, but I'm not convinced that it makes enough of a difference to divide it up that way for one of these reports.
This area is a little bit of a mixed bag. There are a couple of newer developments and a handful of older homes, but it's dominated by 1960ish tract homes. We have a lot of multi-family in this area as well, a segment that I don't really track much unless I have a client buying or selling that type of property - there isn't a lot of volume of listings and sales in that segment in any case. I'm also not accounting for attached units (condos) in this post, those were covered a little while back in a separate Focus On post.
We have 18 active and another 13 contingent listings on the market right now. Of all of those units, 19 are short sales and 9 are REO's, leaving only 3 "traditional" sellers on the market. Because we are so heavy on short sales here, we're seeing that a lot of the inventory has been on the market for quite a while - the median days on market (DOM) for our active/contingent listings is 73.
We have 8 pending units in this area tonight, 6 REO's and 2 short sales. The median DOM for our pending units is 29. We've had a lot of sales in here in the past 3 months - 21 sold units, with a median DOM of 27. 15 of the sold units were REO's, and 4 were short sales. It doesn't take a math genius to figure out what these numbers mean - REO's sell in a hurry, almost always because they are well priced. Short sales tend to linger for a while. Traditional sellers are largely sitting it out and waiting for better days.
The REO bug didn't just bite in this area last year - it drew blood and left a nasty scar. 65 of the 87 sold units in 2008 were REO sales (74.7%). Another 8 were short sales. The amazing thing about this to me is that despite the disproportionate number of REO sales in this area, the decline in values tracks pretty closely with the market as a whole. We appear to have dropped somewhere in the area of 21% of value comparing values in the area from the first quarter of last year to the same period this year (the overall market number is 22.8% per my price per square foot calculation). It appears that the area has dropped around 55% from the peak, a bit more than the market as a whole at around 49%.
Going forward, I would expect that this segment of the market will recover a little slower than the market as a whole, but it's going to be spotty. Some of the newer areas like Riverside will probably bounce back a little quicker, but some of the 1960 tract homes near large apartment complexes will probably lag.
Next week, we'll move one more notch north and take a look at what's happening on the north side of town.
This area is a little bit of a mixed bag. There are a couple of newer developments and a handful of older homes, but it's dominated by 1960ish tract homes. We have a lot of multi-family in this area as well, a segment that I don't really track much unless I have a client buying or selling that type of property - there isn't a lot of volume of listings and sales in that segment in any case. I'm also not accounting for attached units (condos) in this post, those were covered a little while back in a separate Focus On post.
We have 18 active and another 13 contingent listings on the market right now. Of all of those units, 19 are short sales and 9 are REO's, leaving only 3 "traditional" sellers on the market. Because we are so heavy on short sales here, we're seeing that a lot of the inventory has been on the market for quite a while - the median days on market (DOM) for our active/contingent listings is 73.
We have 8 pending units in this area tonight, 6 REO's and 2 short sales. The median DOM for our pending units is 29. We've had a lot of sales in here in the past 3 months - 21 sold units, with a median DOM of 27. 15 of the sold units were REO's, and 4 were short sales. It doesn't take a math genius to figure out what these numbers mean - REO's sell in a hurry, almost always because they are well priced. Short sales tend to linger for a while. Traditional sellers are largely sitting it out and waiting for better days.
The REO bug didn't just bite in this area last year - it drew blood and left a nasty scar. 65 of the 87 sold units in 2008 were REO sales (74.7%). Another 8 were short sales. The amazing thing about this to me is that despite the disproportionate number of REO sales in this area, the decline in values tracks pretty closely with the market as a whole. We appear to have dropped somewhere in the area of 21% of value comparing values in the area from the first quarter of last year to the same period this year (the overall market number is 22.8% per my price per square foot calculation). It appears that the area has dropped around 55% from the peak, a bit more than the market as a whole at around 49%.
Going forward, I would expect that this segment of the market will recover a little slower than the market as a whole, but it's going to be spotty. Some of the newer areas like Riverside will probably bounce back a little quicker, but some of the 1960 tract homes near large apartment complexes will probably lag.
Next week, we'll move one more notch north and take a look at what's happening on the north side of town.
Monday, April 20, 2009
Monday Morning Numbers 4/20/09
Wow, what a magnificent weekend we just had! Perfect weather for the SB County Vintners Festival (I worked one of the tents - that was a great time), the Spring Arts Festival, and putting in a garden. If I've brought you tomatoes in the past, you'll know how important that is. If I haven't, hey, call me. There will be plenty to go around.
Anyway - let's look at some numbers this morning:
Active Listings: 96
Contingent Listings: 39
Pending Listings: 41 (23.3% of the inventory)
Price changes for the past week: 4 (3.0%)
Click here for the up to date price per square foot chart.
Yikes! We're under 100 active listings this morning. If you have to sell a house and you want it gone quick, this is a great time to do that. You won't get as much money as you might after the prices recover, but it might be quite a while before that happens in any substantial way.
And if you look at the pending and contingent listings, you'll see that if you add them together they are at 80. I wouldn't have thought this possible before, but if things keep moving in the direction they are, we might see the combined number surpass the active listings. These are some strange and interesting times in the Lompoc real estate market, my friends...
Anyway - let's look at some numbers this morning:
Active Listings: 96
Contingent Listings: 39
Pending Listings: 41 (23.3% of the inventory)
Price changes for the past week: 4 (3.0%)
Click here for the up to date price per square foot chart.
Yikes! We're under 100 active listings this morning. If you have to sell a house and you want it gone quick, this is a great time to do that. You won't get as much money as you might after the prices recover, but it might be quite a while before that happens in any substantial way.
And if you look at the pending and contingent listings, you'll see that if you add them together they are at 80. I wouldn't have thought this possible before, but if things keep moving in the direction they are, we might see the combined number surpass the active listings. These are some strange and interesting times in the Lompoc real estate market, my friends...
Thursday, April 16, 2009
2009 First Quarter Update
What a difference a year makes! As I started to look at the data on our market for the first quarter of the year and comparing it to the first quarter of 2008, I began to realize how long ago that really was. It's only a year on the calendar, but in this market these days, a year might as well be a century.
One thing does look to be the same as last year - the number of sold units is nearly identical. We sold 81 units in our MLS in the first quarter of 2008, and at this point we have 82 sold units for the same quarter this year. We'll probably have one or two more stragglers coming in with late entries in the next few weeks (as I shake my fist at my fellow agents who are late in updating their listings).
Despite having roughly the same number of sold units, I can tell you that our buyer activity level is considerably higher than it was in the same period last year. We have more properties in escrow and more multiple offers on properties. It looks like buyers have gotten the memo. Prices are low, interest rates are lower, and affordability is at historic levels. Sure, we're in a recession, and a lot of folks are hurting. But the other side of a down economy is that there are enormous opportunities. I've heard it said, and I believe this: More millionaires are made in economic downturns than are made in economic booms.
Let's take a look at some numbers - all these numbers are from the first quarter of the year shown:
2009 Sold Units - 82
2008 Sold Units - 81
2009 REO Sales - 55 (67.1%)
2008 REO Sales - 45 (55.6%)
2009 Closed Short Sales - 11 (14.6%)
2008 Closed Short Sales - 3 (3.7%)
2009 Sold Unit Median Days On Market - 29
2008 Sold Unit Median Days On Market - 56
2009 Median Escrow Period - 43.5 days
2008 Median Escrow Period - 36 days
2009 Average Price Per Square Foot: $151
2008 Average Price Per Square Foot: $197
Click here for the new and improved, up to date price per square foot chart.
OK - look at that chart. This is the first month in quite a while that we haven't dropped a significant amount in values from the previous quarter. This doesn't surprise me much - I think that prices have been driven down past the point where things became affordable. I wrote about this a few weeks ago - I think that prices dropped way below where they needed to in order to bring buyers back to the market. We had multiple offers on properties pretty regularly 25% ago. Now we have a feeding frenzy. I've said here before that I'll tell you where the bottom of the market was six months after it happened. I'm sticking by that. Even though the immediate data looks like things might be flattening out, I'm not calling it the bottom just yet. I will, however, tell you this much - Diane & I are actively looking for a good real estate investment opportunity right now for ourselves. We'd hate to look back 5-10 years from now and realize that we missed a prime opportunity.
A couple of other things of note in these numbers: Check out the difference in days on market and escrow periods. Market times have been cut almost in half and escrow periods have increased by about a week. The DOM is mostly due to aggressively priced REO properties. It's a rarity anymore to see an REO property sit on the market for more than a week without offers.
The escrow times have increased somewhat for three reasons. First, more government backed loans, which take a little longer. 46.3% of our closed transactions were done on FHA or VA loans this year, vs. 19.8% last year. Second, almost all of the REO escrows wind up with out of town escrow offices, usually in the L.A./Orange/San Bernardino County region, and these escrow "warehouses" don't tend to be the most efficient operations. I think every agent in our area who has worked an REO transaction has a war story to tell about it. I could go on and on about it, but I'd probably be hearing from someone's attorney...
The third reason is the increasing number of closed short sales. Short sales are starting to make up a significantly bigger chunk of our sold units. I think that part of that is because some banks are starting to cooperate a bit more (although some aren't). Part of it is also due to the fact that our inventory has thinned to the point where buyers have started looking more seriously at these as an option. If you've been reading the Monday Morning Numbers posts, you know that I've been pointing out how many contingent sales we have every week, and short sales are one of the primary reasons for this. And back to the point about increased escrow times - well, short sales move at a glacial pace. As they get more of a market share, we'll see longer escrow times.
Going forward, I don't see any reason right now to modify my earlier predictions for the year that I posted a few months ago. I still think that we're going to see somewhat of an increase in inventory this summer, but not a big spike. I think that buyer activity should remain very robust for the rest of the year. And I think that my cracked crystal ball might look pretty good now, but I'm still not ready to take it to Vegas.
One thing does look to be the same as last year - the number of sold units is nearly identical. We sold 81 units in our MLS in the first quarter of 2008, and at this point we have 82 sold units for the same quarter this year. We'll probably have one or two more stragglers coming in with late entries in the next few weeks (as I shake my fist at my fellow agents who are late in updating their listings).
Despite having roughly the same number of sold units, I can tell you that our buyer activity level is considerably higher than it was in the same period last year. We have more properties in escrow and more multiple offers on properties. It looks like buyers have gotten the memo. Prices are low, interest rates are lower, and affordability is at historic levels. Sure, we're in a recession, and a lot of folks are hurting. But the other side of a down economy is that there are enormous opportunities. I've heard it said, and I believe this: More millionaires are made in economic downturns than are made in economic booms.
Let's take a look at some numbers - all these numbers are from the first quarter of the year shown:
2009 Sold Units - 82
2008 Sold Units - 81
2009 REO Sales - 55 (67.1%)
2008 REO Sales - 45 (55.6%)
2009 Closed Short Sales - 11 (14.6%)
2008 Closed Short Sales - 3 (3.7%)
2009 Sold Unit Median Days On Market - 29
2008 Sold Unit Median Days On Market - 56
2009 Median Escrow Period - 43.5 days
2008 Median Escrow Period - 36 days
2009 Average Price Per Square Foot: $151
2008 Average Price Per Square Foot: $197
Click here for the new and improved, up to date price per square foot chart.
OK - look at that chart. This is the first month in quite a while that we haven't dropped a significant amount in values from the previous quarter. This doesn't surprise me much - I think that prices have been driven down past the point where things became affordable. I wrote about this a few weeks ago - I think that prices dropped way below where they needed to in order to bring buyers back to the market. We had multiple offers on properties pretty regularly 25% ago. Now we have a feeding frenzy. I've said here before that I'll tell you where the bottom of the market was six months after it happened. I'm sticking by that. Even though the immediate data looks like things might be flattening out, I'm not calling it the bottom just yet. I will, however, tell you this much - Diane & I are actively looking for a good real estate investment opportunity right now for ourselves. We'd hate to look back 5-10 years from now and realize that we missed a prime opportunity.
A couple of other things of note in these numbers: Check out the difference in days on market and escrow periods. Market times have been cut almost in half and escrow periods have increased by about a week. The DOM is mostly due to aggressively priced REO properties. It's a rarity anymore to see an REO property sit on the market for more than a week without offers.
The escrow times have increased somewhat for three reasons. First, more government backed loans, which take a little longer. 46.3% of our closed transactions were done on FHA or VA loans this year, vs. 19.8% last year. Second, almost all of the REO escrows wind up with out of town escrow offices, usually in the L.A./Orange/San Bernardino County region, and these escrow "warehouses" don't tend to be the most efficient operations. I think every agent in our area who has worked an REO transaction has a war story to tell about it. I could go on and on about it, but I'd probably be hearing from someone's attorney...
The third reason is the increasing number of closed short sales. Short sales are starting to make up a significantly bigger chunk of our sold units. I think that part of that is because some banks are starting to cooperate a bit more (although some aren't). Part of it is also due to the fact that our inventory has thinned to the point where buyers have started looking more seriously at these as an option. If you've been reading the Monday Morning Numbers posts, you know that I've been pointing out how many contingent sales we have every week, and short sales are one of the primary reasons for this. And back to the point about increased escrow times - well, short sales move at a glacial pace. As they get more of a market share, we'll see longer escrow times.
Going forward, I don't see any reason right now to modify my earlier predictions for the year that I posted a few months ago. I still think that we're going to see somewhat of an increase in inventory this summer, but not a big spike. I think that buyer activity should remain very robust for the rest of the year. And I think that my cracked crystal ball might look pretty good now, but I'm still not ready to take it to Vegas.
Monday, April 13, 2009
Monday Morning Numbers 4/13/09
Good morning - let's take our weekly look at activity in our local real estate market:
Active Listings: 105
Contingent Listings: 35
Pending Listings: 36 (20.5% of the inventory)
Price changes for the past week: 7 (5.0%)
Click here for our most recent price per square foot chart.
I keep thinking that I should start treating the contingent listings the same as pendings and lump them all together, but for the sake of consistency I don't think I will. I treat them differently because contingent listings, especially contingent short sales, are much less likely to close than pending listings. I suspect that we'll continue to see a large number of contingent listings for as long as our inventory is thin and buyers are trying to pick up short sales. What I can do is occasionally point out the difference in the numbers if we were to treat these categories the same. For instance - we have 5.7 months of inventory on the market this morning using my standard method of calculating this number. But if I treat contingent listings the same way I treat pendings, we would have 4.3 months of inventory. That's a big difference.
Later this week, I'm going to do a first quarter review and post an updated price per square foot chart with it.
Active Listings: 105
Contingent Listings: 35
Pending Listings: 36 (20.5% of the inventory)
Price changes for the past week: 7 (5.0%)
Click here for our most recent price per square foot chart.
I keep thinking that I should start treating the contingent listings the same as pendings and lump them all together, but for the sake of consistency I don't think I will. I treat them differently because contingent listings, especially contingent short sales, are much less likely to close than pending listings. I suspect that we'll continue to see a large number of contingent listings for as long as our inventory is thin and buyers are trying to pick up short sales. What I can do is occasionally point out the difference in the numbers if we were to treat these categories the same. For instance - we have 5.7 months of inventory on the market this morning using my standard method of calculating this number. But if I treat contingent listings the same way I treat pendings, we would have 4.3 months of inventory. That's a big difference.
Later this week, I'm going to do a first quarter review and post an updated price per square foot chart with it.
Wednesday, April 8, 2009
Surviving the Feeding Frenzy
I don't know of a better term to use than "feeding frenzy" for what's happening with a lot of properties out there right now. Multiple offers on well priced properties, especially REO's, have been common for over a year now, but in recent months, it seems like it's been a rare REO listing that hasn't had several offers on it within a few days of listing. In some cases, we've seen 8 or 9 offers on especially attractive deals.
If you've been reading this blog for any amount of time, you know that our inventory has gotten tight over the pat few months. I'm going to do a 2009 first quarter review next week, but here's a little preview of one key stat: New residential listings on our market for the quarter dropped by about a third compared to the same quarter last year (103 this year, 155 in 2008). REO listings dropped by the same percentage (44 vs. 66) - accounting for about 43% of the total listings in both periods. It looks like we're on pace to be almost exactly where we were last year in terms of sold units year-to-date. Thus the big decline in inventory.
So here's the deal - if you're looking to pick up a good deal on an REO listing in this market, here are a few tips:
1 - Get a good agent (I just happen to know a couple - hint, hint).
2 - Get with a local lender and get pre-approved. Not just pre-qualified; you want to go through the process and get pre-approved. That's going to carry more weight with the sellers when they look at your offer. In some cases, especially on Wells Fargo or Countrywide properties, the seller is going to require that you pre-qualify through one of their loan officers. That's OK - they don't bite, really they don't. It's good to get a second opinion on your loan, and they might be able to cut you a better deal. If they don't, you aren't obligated to use them.
3 - Don't look at the list price in determining value. Look at the comps. For a long time, buyers have been conditioned to automatically go in low on offers to see if they can get a deal. That made sense in a different market, and on some listings, it still can. But we're seeing a lot of new REO listings coming on at prices that are clearly well below value, and in some cases, even going 10% over list will still get you a price that's well below recent sales. Just because you have to compete doesn't mean that you have to overpay.
4 - Make your best offer up front. This is especially true on underpriced properties. Here's the thing that drives us all crazy: There isn't any established "rule of thumb" on what to expect with a seller response on an REO. Some of them will come back and counter all offers with something like "make your highest and best offer". Some will only counter a few offers. Some will just take the best offer and run with it. This isn't a time to stake out a negotiating position. You might not get a chance to negotiate at all. Go in strong, give it your best shot up front. You don't want to lay awake at night regretting the one that got away when you would have been willing to pay more than it eventually sold for.
5 - Be patient. For a while last year, it seemed like we were getting responses back from the sellers on these properties pretty promptly. In the last couple of months - not so much. In some cases, we've seen it take a few weeks to get a final response. And then once we get into escrow, we wind up waiting to get an escrow officer assigned. The overwhelming majority of these escrows wind up out of town in large escrow offices down in the L.A./Orange County area, and this all too often results in further delays. It's one of my personal pet peeves - don't even get me started. But the important thing here is this: Keep your eyes on the prize. Yes, it's going to be slow and frustrating. But after it's all over, you're going to be getting a good deal on a home.
6 - If you're having trouble winning out on multiple offer situations, especially if you've been bumping up against your limits on price, look for something that's a little bit off the radar. Even though most of these seem to be coming on at "buy me now" prices, there are still some properties out there that aren't getting a lot of attention because they aren't priced right. There might be some opportunities to negotiate some of those down to a good price, especially if they've been on the market for a little while. Or my personal favorite - find one that just fell out of escrow. Those can be ripe for an aggressive offer sometimes, especially if it fell out over buyer qualification issues and you can bring in a strong pre-approval.
7 - Cash is king. If you have to compete against cash with an FHA or VA loan, it can be an uphill battle. If you can bring enough cash to even get a conventional loan, that can help a lot. But if you are in a position that requires FHA/VA, don't despair. It might take a few tries, but like I said above - patience, patience, patience.
8 - Don't limit yourself to REO properties. While these are often the best deals out there, there are occasionally some very good deals to be had on homes offered by traditional sellers as well. If you have someone who has to move and they have some flexibility, there could be a good opportunity to strike a good deal. And chance are pretty good you'll get a home in better condition to boot. You might also find some opportunities with some short sales, but you need to be somewhat selective about those, and that part above about patience? Double that.
It's a crazy and exciting time to be buying a home right now. Fasten your seat belt, keep your arms inside the car at all times. And enjoy the ride.
If you've been reading this blog for any amount of time, you know that our inventory has gotten tight over the pat few months. I'm going to do a 2009 first quarter review next week, but here's a little preview of one key stat: New residential listings on our market for the quarter dropped by about a third compared to the same quarter last year (103 this year, 155 in 2008). REO listings dropped by the same percentage (44 vs. 66) - accounting for about 43% of the total listings in both periods. It looks like we're on pace to be almost exactly where we were last year in terms of sold units year-to-date. Thus the big decline in inventory.
So here's the deal - if you're looking to pick up a good deal on an REO listing in this market, here are a few tips:
1 - Get a good agent (I just happen to know a couple - hint, hint).
2 - Get with a local lender and get pre-approved. Not just pre-qualified; you want to go through the process and get pre-approved. That's going to carry more weight with the sellers when they look at your offer. In some cases, especially on Wells Fargo or Countrywide properties, the seller is going to require that you pre-qualify through one of their loan officers. That's OK - they don't bite, really they don't. It's good to get a second opinion on your loan, and they might be able to cut you a better deal. If they don't, you aren't obligated to use them.
3 - Don't look at the list price in determining value. Look at the comps. For a long time, buyers have been conditioned to automatically go in low on offers to see if they can get a deal. That made sense in a different market, and on some listings, it still can. But we're seeing a lot of new REO listings coming on at prices that are clearly well below value, and in some cases, even going 10% over list will still get you a price that's well below recent sales. Just because you have to compete doesn't mean that you have to overpay.
4 - Make your best offer up front. This is especially true on underpriced properties. Here's the thing that drives us all crazy: There isn't any established "rule of thumb" on what to expect with a seller response on an REO. Some of them will come back and counter all offers with something like "make your highest and best offer". Some will only counter a few offers. Some will just take the best offer and run with it. This isn't a time to stake out a negotiating position. You might not get a chance to negotiate at all. Go in strong, give it your best shot up front. You don't want to lay awake at night regretting the one that got away when you would have been willing to pay more than it eventually sold for.
5 - Be patient. For a while last year, it seemed like we were getting responses back from the sellers on these properties pretty promptly. In the last couple of months - not so much. In some cases, we've seen it take a few weeks to get a final response. And then once we get into escrow, we wind up waiting to get an escrow officer assigned. The overwhelming majority of these escrows wind up out of town in large escrow offices down in the L.A./Orange County area, and this all too often results in further delays. It's one of my personal pet peeves - don't even get me started. But the important thing here is this: Keep your eyes on the prize. Yes, it's going to be slow and frustrating. But after it's all over, you're going to be getting a good deal on a home.
6 - If you're having trouble winning out on multiple offer situations, especially if you've been bumping up against your limits on price, look for something that's a little bit off the radar. Even though most of these seem to be coming on at "buy me now" prices, there are still some properties out there that aren't getting a lot of attention because they aren't priced right. There might be some opportunities to negotiate some of those down to a good price, especially if they've been on the market for a little while. Or my personal favorite - find one that just fell out of escrow. Those can be ripe for an aggressive offer sometimes, especially if it fell out over buyer qualification issues and you can bring in a strong pre-approval.
7 - Cash is king. If you have to compete against cash with an FHA or VA loan, it can be an uphill battle. If you can bring enough cash to even get a conventional loan, that can help a lot. But if you are in a position that requires FHA/VA, don't despair. It might take a few tries, but like I said above - patience, patience, patience.
8 - Don't limit yourself to REO properties. While these are often the best deals out there, there are occasionally some very good deals to be had on homes offered by traditional sellers as well. If you have someone who has to move and they have some flexibility, there could be a good opportunity to strike a good deal. And chance are pretty good you'll get a home in better condition to boot. You might also find some opportunities with some short sales, but you need to be somewhat selective about those, and that part above about patience? Double that.
It's a crazy and exciting time to be buying a home right now. Fasten your seat belt, keep your arms inside the car at all times. And enjoy the ride.
Monday, April 6, 2009
Monday Morning Numbers 4/6/09
Another Monday morning, another set of numbers:
Active Listings: 101
Contingent Listings: 35
Pending Listings: 36 (20.9% of the inventory)
Price changes for the past week: 5 (3.7%)
Click here for our most recent price per square foot chart.
I'll have an updated price per square foot chart out next week reflecting our first quarter 2009 sales.
The numbers this week look awfully similar to the numbers I've been posting on here for several weeks. About the only change of note is that some of the contingent listings moved into pending status. We still have solid demand for houses, and not as much inventory to choose from as we had for the past couple of years.
Don't expect to see that change from REO listings anytime in the near future. I've been tracking what's out there in terms of foreclosed homes that haven't hit the market and unresolved Notice of Sale (NOS) recordings. As of this morning, I can identify 42 REO properties that have yet to hit the market (down from 50 a few weeks ago) and 89 unresolved NOS recordings (78 a few weeks ago). We've been seeing a decrease in the number of homes going back to the bank at the courthouse steps in recent weeks. Most sales have been postponing for anywhere from a couple of weeks to a couple of months from the scheduled date. We had wondered if that might change when April rolled around. Fannie Mae and Freddie Mac had moratoriums on foreclosures through the end of March, so we thought that we might see a few more of these resolve in April. So far through the first week of the month we haven't seen a change. But it's early - we'll keep an eye on it.
Active Listings: 101
Contingent Listings: 35
Pending Listings: 36 (20.9% of the inventory)
Price changes for the past week: 5 (3.7%)
Click here for our most recent price per square foot chart.
I'll have an updated price per square foot chart out next week reflecting our first quarter 2009 sales.
The numbers this week look awfully similar to the numbers I've been posting on here for several weeks. About the only change of note is that some of the contingent listings moved into pending status. We still have solid demand for houses, and not as much inventory to choose from as we had for the past couple of years.
Don't expect to see that change from REO listings anytime in the near future. I've been tracking what's out there in terms of foreclosed homes that haven't hit the market and unresolved Notice of Sale (NOS) recordings. As of this morning, I can identify 42 REO properties that have yet to hit the market (down from 50 a few weeks ago) and 89 unresolved NOS recordings (78 a few weeks ago). We've been seeing a decrease in the number of homes going back to the bank at the courthouse steps in recent weeks. Most sales have been postponing for anywhere from a couple of weeks to a couple of months from the scheduled date. We had wondered if that might change when April rolled around. Fannie Mae and Freddie Mac had moratoriums on foreclosures through the end of March, so we thought that we might see a few more of these resolve in April. So far through the first week of the month we haven't seen a change. But it's early - we'll keep an eye on it.
Friday, April 3, 2009
Focus On South Side Lompoc
The south side of Lompoc has long had a little bit of a cachet. It's generally a desirable area, with some very nice established neighborhoods. There are a broad range of property types here, mostly single family houses with some multi-family mixed in, along with a few condo complexes. This is "Old Lompoc" - there are several homes in this part of town dating from the first few decades of the 20th century. But there are a lot of boom-era 1960ish homes here, as well as neighborhoods here that were built in the 70's and 80's. We also have one big new construction development, Crown Point.
For the purposes of this report, I'm omitting Crown Point (which I covered in the newer construction a couple of weeks ago) and condos. Let's take a look at the activity:
We have 11 active and 4 contingent listings here as of today. As is true for most of the market, a big chunk of these are distressed properties - 4 REO's and 4 short sales. We have 5 pending units, all of which are REO's. Over the past three months, we've seen 8 sold units, including 3 REO's and 3 short sales. The foreclosures were slightly less prominent here in 2008 than the market as a whole. Of the 50 sold units in the area, exactly half (25) were REO's, and 5 were short sales.
Values here have dropped pretty much in line with the market as a whole, about 25% over the past year and about 45-50% from the peak. I expect that this area will probably recover faster than the overall market when the change comes owing to the desirability of the neighborhoods.
I'm going to tack a quick REO numbers update onto the coming Monday Morning Numbers post. Then I'll come up with something for later in the week, to be determined. I have a couple of topics in mind to break up the neighborhood/market segment focus I've done for the past few weeks.
For the purposes of this report, I'm omitting Crown Point (which I covered in the newer construction a couple of weeks ago) and condos. Let's take a look at the activity:
We have 11 active and 4 contingent listings here as of today. As is true for most of the market, a big chunk of these are distressed properties - 4 REO's and 4 short sales. We have 5 pending units, all of which are REO's. Over the past three months, we've seen 8 sold units, including 3 REO's and 3 short sales. The foreclosures were slightly less prominent here in 2008 than the market as a whole. Of the 50 sold units in the area, exactly half (25) were REO's, and 5 were short sales.
Values here have dropped pretty much in line with the market as a whole, about 25% over the past year and about 45-50% from the peak. I expect that this area will probably recover faster than the overall market when the change comes owing to the desirability of the neighborhoods.
I'm going to tack a quick REO numbers update onto the coming Monday Morning Numbers post. Then I'll come up with something for later in the week, to be determined. I have a couple of topics in mind to break up the neighborhood/market segment focus I've done for the past few weeks.
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