Lompoc Real Estate Blog

Monday Morning Numbers 5/30/11

2011-05-30T08:17:00.000-07:00

Good morning again. Every year on Memorial Day I have to say something about this - I think that we as a nation seem to have lost perspective on this holiday. We've turned it into some big "start of summer" three day weekend where we can get together with friends and have a few beers and grill up some steaks, or go out to the mall to take advantage of the great deals on their holiday weekend sales. And I have a problem with that. Not so much with enjoying the time off work, but with losing sight of what this holiday is actually commemorating. Over the years we've asked a lot of our military, and they've always answered the call. By all means, have a few beers and fire up the BBQ, but also take some time today to think about the young men and women that have made the ultimate sacrifice for our nation.

OK, let's look at some numbers:

Active Listings: 139

Contingent Listings: 39

Pending Listings: 57 (24.3% of the inventory)

New listings: 11

Months of inventory: 5.9
Click here for the updated price per square foot chart.

Inventory is down slightly from last week, and we're below the 6 month level for the first time since the beginning of this year. Aside from that, there's not much of note in the numbers this week. I still haven't figured out what I'm going to cover later this week, but when the muse comes to me I'll bang something out.

Focus on Mission Hills

2011-05-27T16:01:00.000-07:00

This week the wheel turns again and lands on Mission Hills. For a little background on the area and a description of the homes here, you can take a look at my first post on it from way back in March 2009.

For a while there, Mission Hills was much like South Vandenberg Village in that there was almost no inventory and very little activity. Things have picked up a little bit, but it's still a pretty low activity area. We have 6 active listings up there this afternoon, with 3 REO's, 2 short sales and one non-distressed listing.

Sales activity has been stable and pretty much in line with the inventory. We have 2 contingent sales in the area (1 REO/1 SS) and only one pending sale, a non-distressed property. We've seen 6 sales over the past 3 months (2 REO/3 SS/1 ND). A look at those sales shows that for an area that has a pretty homogeneous house inventory, there is a very broad range of values. We had a couple of fairly nice units selling at or near the $200,000 level, and a couple of rougher ones selling in the $100-130K range. These are pretty much the same levels that we've seen up there for the past year or so.

Come on back next week and I'll come up with something new to say. Or maybe I'll just say the same old $#@&. You'll just have to check in to find out.

Focus on Foreclosure Activity

2011-05-23T14:57:00.000-07:00

Since I didn't quite get to this last week, I'm going to try to double up this week on posts if I can find time. It's been a little while since I updated you on what's going on with foreclosure activity in our market, and since its such a key driver of this market, I probably should just do this once a month.

We've seen some fairly stable activity in foreclosures for the past several months by most of the metrics that I use. If you'll take a look at this chart, you'll see that we bounce around a little bit in most of these measures, but there's no real identifiable trend line. We've seen a bit of a drop in the number of new Notice of Trustee's Sale (NTS) filings, but Notice of Default (NOD) filings have been up a bit in recent months. If you look at it, you'll see that you can usually see that NTS trends follow NOD trends by a few months, so it wouldn't be a big shock if we saw an increase in NTS filings in the months ahead. In fact, we might be starting to see that already. I look at the notices in the paper and it looks to me like we're seeing more new filings so far this month.

The red line on that chart shows how many total unresolved sales we have at the end of each month. That dropped off pretty sharply over the past couple of months, but if we are seeing an increase in NTS filings, that should start to edge back up again.

We have about 65 unlisted properties that have gone back to the bank now, which is pretty much in line with what we've seen for the past couple of years. That's at a point where - for reasons unclear to me - we usually get a little bit of a run of REO listings. We'll see if that holds this time.

A preliminary look at the sales for the second quarter (mind you, we're about halfway through that) we appear to be seeing a lower level of REO's as a percentage of sales - around 35% vs. a little over half for the first quarter. That's probably going to be a good sign for prices in the quarter, but that could also shift between now and the end of the quarter if we do get an influx of REO listings.

When I look into my slightly cracked crystal ball, I really don't see any reason to expect any big change one way or the other with the level of foreclosure activity that we have now. Our employment picture locally is in what feels like some kind of permafunk, and we still have about 40% of the properties in our market in a negative equity situation. Short sales seem to be slow in making inroads and have been pretty stagnant in terms of success rates. So until some of these other factors improve, we're going to see foreclosures at about the same rate we're seeing now. Wish I had better news for you.

Monday Morning Numbers 5/23/11

2011-05-23T07:14:00.000-07:00

Well, it looks like Saturday came and went, and no apocalypse. Good that I didn't liquidate everything I own and head off to a beach in Jamaica for the last few weeks of the year, which was the first thought I had when I heard that prediction. On the other hand, sometimes that sounds good even when the end isn't purported to be imminent. Let's take a look at this week's market stats:

Active Listings: 143

Contingent Listings: 35

Pending Listings: 59 (24.9% of the inventory)

New listings: 9

Months of inventory: 6.4
Click here for the updated price per square foot chart.

Most weeks lately I've been remarking that there were no big changes from the past week in these numbers. But this week is kind of ridiculous - there were very small changes to three of those numbers from last week. It would appear that we've hit another plateau for the time being in our market activity.

I got bus last week and didn't get to that foreclosure activity update, so I'm going to try to crank that out this afternoon if I can and work in a post later in the week on Mission Hills activity.

Monday Morning Numbers 5/16/11

2011-05-16T07:55:00.000-07:00

I've been doing a bunch of yard project stuff over the past few weeks, and boy is my back screaming at me this morning. Getting old sucks. So let's do something that requires just a little less physical strain. Let's run some market numbers:

Active Listings: 142

Contingent Listings: 35

Pending Listings: 59 (25.0% of the inventory)

New listings: 9

Months of inventory: 6.2
Click here for the updated price per square foot chart.

Inventory is down slightly this week, and pending sales are up slightly. Aside from that, there really isn't anything noteworthy in these numbers this week. We might be trending very slowly to a lower inventory, higher activity market but it's too early to say for sure.

Later this week I'll have an update on foreclosure activity in our market.

Focus on South Vandenberg Village

2011-05-13T10:35:00.000-07:00

This week we're taking a look at the market for houses in South Vandenberg Village. As a reminder, when I cover this neighborhood I'm not including condos or the newer homes in Providence Landing. I cover those separately. For a little background on the area, go back to my first post on the area from 2009.

For what seems like a very long time, I had almost nothing in this area to report. We had very little activity of any nature here for over a year. I'm not sure why that was, but there weren't a lot of listings here, which of course means not many sales. It appears that might be changing, and we have a little bit more activity there now.

We have 7 active listings on the market up there this morning. Only one of them is an REO, and there are 3 each short sales and non-distressed listings. That's still not a ton of inventory, but last year there were times when I reported on this area and only had one or two listings.

Sales activity has been pretty much what we would expect for the level of inventory based on our market norms. We have 2 contingent sales in the area (1 REO/1 SS) and 3 pending sales (2 SS/1 non-distressed). Over the past three months, we've had 4 sales in the area (3 REO/1 non-distressed). There really aren't enough data points here to identify a price trend, but since 3 of the four sales were REO's I would expect that the trend has been somewhat down.

Next week I'll update foreclosure activity in our market.

Monday Morning Numbers 5/9/11

2011-05-09T07:45:00.000-07:00

Good morning again. I spent most of last week up in Sacramento at the California Association of REALTORS® spring meetings. I gotta tell you, we're getting to be a pretty frustrated bunch of people about short sales. If you read my little rant about them a couple of months ago, you might have some insight into why. So rather than go back into that again this morning, I'm just going to get into some numbers:

Active Listings: 147

Contingent Listings: 35

Pending Listings: 55 (23.3% of the inventory)

New listings: 13

Months of inventory: 6.5
Click here for the updated price per square foot chart.

We had a little more normal number for new listings this week, and as a result our raw number of active listings moved up a little. But we saw a very small decrease in our months of inventory because we had a little bit of an increase in reported closings last week. But for the most part, there's not a lot of change from last week.

Later this week I'll get you that update on South Vandenberg Village.

Monday Morning Numbers 5/2/11

2011-05-02T07:30:00.000-07:00

Seen the news yet this morning? If you haven't, stop reading this and go turn it on. You'll be glad you did... Just make sure to come back later. Let's take a look at this morning's market stats:

Active Listings: 142

Contingent Listings: 33

Pending Listings: 55 (23.9% of the inventory)

New listings: 6

Months of inventory: 6.6
Click here for the updated price per square foot chart.

Our inventory is down a little this week, partly because it was a slower than usual week for new listings, and partly because we continued to see a slow increase in pending sales. I'll probably do an REO update in a couple of weeks, but I wanted to share something with you this morning before that. One of the numbers that I track regarding foreclosure activity is the number of unresolved trustee's sales in our area. I look at it at the end of every month, and at the end of April we had 105. That's the lowest that number has been in over two years. If that trend holds, it could be a very positive thing for our market.

I may not have time to get to a mid-week post this week, but if I do it'll be an update on South Vandenberg Village.

Let's do a little negotiating

2011-04-30T16:06:00.000-07:00

I've been trying to get to this post all week, and then I took a look at today's Pearls Before Swine strip, and it just seemed all too appropriate. I love Pearls - cynical & twisted humor like that is right up my alley. Anyway...

We live in a unique culture in the world in a lot of ways, and one of the ways that we are unique is that we really don't negotiate all that much, at least where it concerns buying things. We negotiate on houses and cars, and most of the rest of the time we just pay list. In most other cultures, they negotiate nearly everything. It's just ingrained. I'm not sure how we came to be so different. It probably has something to do with living in the Land of Plenty - but if our economy doesn't recover soon maybe that aspect of our culture will change.

The thing about negotiation is that it's much more art than science. There really isn't any one-size-fits-all approach to it. No two scenarios are exactly alike, and a big part of being successful in a negotiation is having a good grasp on the entire scenario. Here are some of the things that I've learned either from experience or from listening to experts that might come in handy with your next negotiation.

It's a zero sum game.

At least where the money is concerned, every thing that you win, your negotiating counterpart loses. And it goes the other way as well. Understand this going in. When you are talking strictly in money terms, there is no such thing as win-win. If you give a dollar, they win a dollar. It's very simple math. However...

It's not always about the money.

One of the mistakes that a lot of people make in a negotiation is to overlook that there are two components to a purchase negotiation - price and terms. I once had a trainer demonstrate this by saying that we could decide which we wanted - price or terms. We'd pick one, he'd pick the other, and he'd come out on top. So one of the students was going to sell him something - I forget what it was, and he said "OK, name whatever price you want". She offered up a million dollars. He said "OK. A dollar a year for a million years and I take delivery today." That's obviously an extreme, but you get the point. It's important to understand that sometimes it's possible to come out better at a lower (or higher) price if the other terms are right.

Know if you are competing.

If you're buying a house and there are other offers on it, you probably don't want to stake out a negotiating position on it. But if it's something that's been around for a while and there aren't any offers, you might take a shot. But one thing to keep in mind - a good listing agent will know who else has been showing the house. And when an offer looks imminent or has come in, we'll usually make a few phone calls to see if we can shake out a competing offer or two. I've seen this movie a few times, and I can tell you that it's not all that unusual for a house to sit on the market for 4-5 months without an offer, only to get three in the space of a week. On the flip side - if you are selling, it behooves you to know what other houses are on the market that could be competition for a buyer. If you have a lot of similar houses competing for buyers, you might want to take a little less of a hard core stance. But if there really isn't much else like your house out there or if you're in a thin inventory market, you might see if you can squeeze the buyer a bit in a negotiation.

Shut up and listen.

This is probably the best simple piece of all-purpose advice that you can get or give on almost any topic. It's much easier to hear what the other side is saying if you aren't in broadcast mode all the time, and you might pick up some valuable information from them that you can use to your advantage. On the other hand, if you insist on running your mouth, you might very well give away something that could compromise your position. A corollary to this rule is...

Never tell anybody your bottom line.

If you're buying or selling a house especially, don't tell anybody how high or low you are willing to go to get the deal done. Nobody. Not your agent, not your co-workers, don't even tell your mother. People can sometimes let something slip inadvertently, and word can get around in a hurry, especially in a small town like this. And if you're on Facebook or Twitter, don't even think about posting anything about your transaction there. I'll tell you this without apology - if I'm on the other side of a deal from you and I learn information that will help my client get a little bit better deal, I'm going to use it with extreme prejudice. Anything you say can and will be held against you in a negotiation.

Know what you want.

This sounds easier than it really is. Sometimes you have to stop and think for a minute - "What is it that I really want or need to accomplish here?". You can't map out a strategy if you don't have a goal in mind.

Walking away is always an option - but you better be sure.

Look, if it's not right, it's not right. Sometimes saying no is the best option that you have. But before you do - make good and sure that "No" is the right answer. Sometimes you can walk away from a deal and it'll all come back together and you'll get a better deal for it. But I've also had buyers walk away from a deal hoping that they can revive it a week or two later after they've let the seller sweat a little, only to see another buyer jump in and get the house that they really wanted. And I wish I had a nickle for every time I saw a seller bounce an offer that would have netted them much more than they wound up getting later.

I hope that you find a few of these tips useful. Botching a negotiation can be very painful and expensive, but doing it well can be extremely rewarding.

Monday Morning Numbers 4/25/11

2011-04-25T08:31:00.000-07:00

Good morning again, hope you had a good Easter weekend. We also had the Spring Arts Festival over across the street from us this weekend, and I can't help but wonder if doing that on Easter weekend was good or bad for the turnout. I didn't make the connection that they coincided this year until late last week, and then I was a little surprised that they didn't adjust the festival schedule. Go figure. Let's take a look at this week's numbers:

Active Listings: 150

Contingent Listings: 30

Pending Listings: 52 (22.4% of the inventory)

New listings: 10

Months of inventory: 6.8
Click here for the updated price per square foot chart.

Another week with very similar looking numbers. Nothing new to see here, move along...

Later this week I'll be back with a few tips on negotiation.

Focus on North Vandenberg Village

2011-04-22T10:45:00.000-07:00

In case you never noticed - and I'd be shocked if you did - I have a sequence that I use for the areas that I cover in this blog. And way back in the beginning when I started writing this blog, the very first area post was North Vandenberg Village. So we're starting the cycle over again. As I tell you every time I do one of these, if you'd like to go back and get some background on the area, go back and take a look at the first post I did on it back in 2009.

I was just looking at this area for a buyer client recently, and the first thing that popped off the screen at me was the inventory level. We have 16 active listings up there this morning. That's a pretty big number for that neighborhood. The good news is that it's not dominated by distressed sales. None of them are REO listings, and 5 of them are short sales leaving us with 11 traditional sellers. We only have two contingent sales at the moment, both short sales.

Sales activity is relatively low considering the inventory. We only have 3 pending sales in the area right now (1 each REO/SS/Trad). Over the past 3 months we've seen 7 sales, which have been a little heavier in distressed properties (3 REO/1 SS/3 Trad). The 3 REO's that sold were all considerably lower than price than the other sales - and from what I saw of them they were pretty beat up.

The small number of sales here makes it a little more difficult to nail down price trends, but from what I can see, it looks like these non-distressed sales are pretty close in value to what we had been seeing in the previous three months, but the increase in bank owned sales in the area were a drag on prices. It's very similar to what I reported last week about the first quarter of this year - price trends appear to be down at the moment driven by an increase in the percentage of REO sales. If there's encouraging news for North Village, it's that the current inventory isn't heavy in REO's, so when some of those wind up selling down the line, it should help shore things up.

I'm sure that I'll come up with something to write about next week. I'm just not sure yet what that is.

Monday Morning Numbers 4/18/11

2011-04-18T08:15:00.000-07:00

Good morning again. It's time again for a look at our Lompoc market stats:

Active Listings: 153

Contingent Listings: 30

Pending Listings: 51 (21.8% of the inventory)

New listings: 10

Months of inventory: 6.6
Click here for the updated price per square foot chart.

In case you missed the first quarter update I did on Saturday, I should warn you - that chart is a little scary this quarter. This week's numbers look an awful lot like last weeks numbers, although the number of new listings is down just a bit. Half of those new listings were REO's this week, and only one new short sale.

Later this week I'll have an update on activity in North Vandenberg Village.

2011 First Quarter Update

2011-04-16T12:35:00.000-07:00

Warning: Reading the following post may be detrimental to your health. Especially if you derive any portion of your income from the sale of real estate in the Lompoc Valley.

OK, now that we have that out of the way, let's take a look at the train wreck that was the first quarter of 2011 in the Lompoc Real Estate Market. Seriously, this was not a good quarter for real estate sales by just about any measure that I can pull out of my statistical bag of tricks. So let's not even bother to try to put lipstick on this pig, and call it what it was.

As I've done for the past several quarters, I break out some of these stats out into numbers that are combined from the Lompoc and Central Coast Regional MLS systems, and then later I'll get into some stats that are Lompoc only. Here are some combined stats:

We had a total of 95 sold units in the first quarter of the year. That is down 7.8% from the sales activity of the same quarter in 2010. Distressed sales made a comeback after a few quarters of more traditional sales, with REO's accounting for 49.5% of sales, and short sales up to 23.2% I've been waiting for that short sale percentage to increase, and it looks like it's starting to move that way.

As you might expect, when we have an increase in REO's as a percentage, our prices suffered. Our price per square foot dropped 9.9% from the previous quarter, down to a new low in this cycle of $128. If you really feel brave, you can take a look at this updated chart. Our median price for detached units took even a larger beating, a 19.5% drop to $184,900. Yikes.

I've said this here many times, but I kind of think that it needs saying again: We are working with a very small sample size here, even when looking at an entire quarter. Things can get skewed a lot by what kind of properties sell, and when half of them are REO properties you can get some pretty funky results. And I looked through the list of properties that sold, and I can tell you that there are a lot of pretty rough houses in that mix. So take these number as data points, but not necessarily as the final authority in how things are going. For instance, it would be hard to convince me that any individual house lost almost 10% of its value last quarter (let alone 19.5%).

Now let's move on to the numbers that are only from the Lompoc MLS:

Looking at the way buyers were financing sales during the first quarter, we see that 17.9% were sold with conventional financing, 34.1% were sold with FHA financing, 23.5% were VA loans, and 22.4% were bought with cash. Cash had dropped off a bit last quarter, but given the type of houses that sold and the price levels, it's not surprising to see that number move back up.

If you've been checking on this blog on Mondays to track our market, you'll know that our inventory has been edging up. One thing that goes hand in hand with that is increased market times. We're up to a median of 50 days on market for our sold units last quarter. We're still at 49 days for a median escrow period, the same as last quarter.

So what does all this mean? Are we in a double dip market decline? I really don't know. I do see a few things that give me a little hope that our second quarter will be better. For instance, of the 95 sales that we saw, 41 of them came in March. Our pending sales have been increasing in recent weeks as well, and the median list price for the pending single family house sales is in the 220K range. So maybe last quarter was just a blip. Maybe it was a harbinger of another ride down the slope of declining sales and values. We'll have to wait to see. I'm getting out of the prognostication business. I don't have a freakin' clue what's going to happen anymore.

Monday Morning Numbers 4/11/11

2011-04-11T08:48:00.000-07:00

Good morning once again, and thanks for checking in. Here we go with another round of weekly market stats to go with your morning coffee:

Active Listings: 152

Contingent Listings: 31

Pending Listings: 50 (21.5% of the inventory)

New listings: 16

Months of inventory: 6.7
Click here for the updated price per square foot chart.

Most of these numbers look pretty close to last week's set, but we continue to see an edge up in our pending sales. That's a good sign. We might be seeing some return to a more traditional seasonal cycle in our sales. We'll see - the past few years have been out of whack with the REO market driving things.

Later this week I'll have a first quarter wrap-up for you. You might want to check it out in the evening with a stiff drink. Maybe I'll write it in the evening with a stiff drink... It wasn't a pretty quarter for our market.

Inside the Life of a REALTOR® - Sales

2011-04-06T15:50:00.000-07:00

Remember a few years ago when they had that special on some channel with a magician who was going to reveal the secrets of the profession? I guess they made some big show of hiding his identity to make sure that his colleagues didn't hunt him down and, oh I don't know, saw him in half or something. I didn't watch it, but I remember a little bit of talk about it.

I'm pretty sure that I'm not going to get sawed in half over this post, so I'm not going to put on the hood of secrecy or whatever it was they did for that guy. But I'm going to tell you a couple of things about the "dark arts" of my profession that maybe you didn't know before. Or maybe you did...

First of all, I'm in sales. Duh - big shocker there, right? But something I bet you didn't know - you probably are too. Even if "sales" isn't part of your written job description, you're probably in sales more than you know. Because when you strip it down to its essence, sales is getting people to do something. In the traditional sense of the word, we use it to mean getting somebody to buy something. But I've come to observe over a period of time that sales encompasses a lot more than that. Teachers, cops, doctors, you name the job - there's probably some level of convincing people to act in a certain way. Parents? Check. Attorneys? Oh, hell yes. Politicians? Please...

Sales in my profession might be a little different than you think. For instance, what do figure that I sell? Houses? Think again. I had a mentor a handful of years ago who observed that in all of her years in real estate, she probably never sold a single house. Never mind the fact that she'd probably worked on tons of transactions. The truth of the matter is, houses sell themselves. I can get clients matched up with houses pretty well, but at the end of the day I can't convince someone to buy a house that they don't want. What I'm really selling a client is me. I sell them my time, my energy, and my expertise. I'm selling them on the notion that they should want to have me working on their behalf in the middle of a real estate transaction.

That sales skill set - selling yourself - is a difficult skill to master. There are many in our profession that do it a lot better than I ever will. The people who do this the best are the ones who get the lion's share of the business. What you, the consumer, need to understand about this is that the skill set of being able to sell yourself is entirely separate from the skill set that is required to watch out for the best interests of a client through a real estate negotiation and transaction. Those aren't mutually exclusive skills, and I know several of my colleagues who do very well with both aspects. But sadly, I also know several who have one but lack the other.

Real estate agents who are good at looking out for their clients but lack the skills required to sell themselves don't last long. They lose business to their competitors that do a better job of convincing the client to work with them. This business is brutal - absolutely merciless - to people who lack the ability to sell themselves.

On the other hand, agents who are good at selling themselves can thrive even if they lack the skills or inclination to look out for the best interests of their clients. They know all the right things to say to get their clients to act, whether or not it's a good move for them. (I could write a whole article on sales scripts, and maybe I will someday.) It's an unfortunate reality, and some of those agents are very successful and have been for years.

So what do you do? Well, my advice is that when you are looking for the services of a real estate agent, talk to people you trust to get a referral to someone that they would use. The best agents - the ones you want to use - will be the ones who get rave reviews from their past clients. If you ask a friend or family member who they used for their transaction last year and the answer is "Oh, it was some guy over at XYZ Realty - dang, what was his name again?" - keep looking. If you get a response something like "Oh, that was a horrible experience! Never again!" get that name too. Chances are really good that they'll remember. The agent you want to use will be somebody who has stayed in contact with their clients after the transaction was over. The other ones - the ones who just railroad clients through a deal regardless of anything else are too busy to stay in contact. They've moved on to the next thing.

Next week I'll wrap up the first quarter activity in our market. I haven't pulled all of the numbers yet, but it may not be pretty...

Hey, this isn't www.lompocliving.com!

2011-04-04T11:29:00.000-07:00

Well, it is for now. We're in a transitional phase with our website, so for the time being we've forwarded our website address here. You were just going there for the blog anyway, right?

Monday Morning Numbers 4/4/11

2011-04-04T08:30:00.000-07:00

Geez Louise, it's April already. Yikes. Let's take a look at this week's market stats:

Active Listings: 147

Contingent Listings: 35

Pending Listings: 43 (19.1% of the inventory)

New listings: 12

Months of inventory: 6.6
Click here for the updated price per square foot chart.

The only significant change that we saw this week was in months of inventory, which dropped sharply from last week. Our raw inventory number only dropped off a little bit, but we had a big week for sold units at the end of the month, which affects that rate number. We'll see if that stays close to where it is or if it climbs back up again in the next few weeks. We also saw a slight bump in our pending sales.

Later this week I'm going to have another look inside the life of a real estate agent. I haven't done one of those in a while. I can't wait to see what I have to say...

Focus on Condos

2011-03-31T16:13:00.000-07:00

This week we're taking a look at our condo market. I use "condo" as a general term to indicate a unit that shares a wall with a neighbor. If you want to nitpick about it, a lot of what I'm including here aren't, technically speaking, condos. That's OK, nitpick away. It's my blog and I've got a thick skin... Oh, and I also don't include Country Club "cluster homes". Those are kind of a unique animal, and they'd significantly skew the numbers.

We have a lot of condo inventory available today - 21 active listings. These are heavy in distressed sales, with 8 REO's, 5 short sales, and 8 non-distressed. The 8 non-distressed are kind of interesting, though. Of those, at least 4 are owned by investors who picked them up at a foreclosure sale to flip. So in reality, we could very easily have as many as 12 REO condos on the market if we didn't have the flip investors.

Sales activity has been pretty steady in recent months for these units, despite some challenges with getting financing on them. We have 8 contingent sales, dominated as per usual by short sales (1 REO/7 SS). There are 5 pending sales as well, and these are almost all REO's (4, with one investor flip property as well). We've had 9 sales over the past three months (5 REO, 1 SS, and 3 non-distressed). Again, it appears that all 3 of the non-distressed sales here were investor flips.

Until I took a look at these numbers, I really hadn't picked up on just how heavy our condo market is with investor flips. It kind of makes sense if you think about it. These are typically lower price points than houses, ergo they come with less risk. Mind you, they come with less of a payoff at the end as well, but a lot of these investors aren't trying to hit a home run with every investment property that they pick up.

Values on condos appear to be holding pretty steady over the past few months, with a slightly lower median sale price but a slightly higher average price per square foot. I don't think that any segment of our market fell harder than this one, so it's good to see things settling down. We still have a lot of challenges in the segment, especially financing problems, but we found a price level that seems to work well for this market.

Monday Morning Numbers 3/28/11

2011-03-28T08:50:00.000-07:00

Good morning again. Remember last week when I said that my brackets were shot? Well, hey, now everybody's brackets are down the tubes! I was ahead of my time! Let's take a look at this week's market stats:

Active Listings: 153

Contingent Listings: 34

Pending Listings: 40 (17.6% of the inventory)

New listings: 17

Months of inventory: 7.4
Click here for the updated price per square foot chart.

Another big week for new listings has pushed our inventory up again. Of the 17 new listings that hit the market last week 7 of them were bank owned properties, which might be an indication that we're seeing some of the small influx of those listings that I thought we might see a few weeks ago.

I didn't have a late week post last week, as you might have noted. I started to write something, but it turned out to be a half-formed thought that wasn't going anywhere. I usually don't let that stop me, but this was going to turn out to be a pretty pointless ramble, so I killed it off. I'll go back to the rotation of neighborhood/market segment posts and cover condos later this week. Maybe by next week I'll figure out how to say what I was going to say in some intelligible form.

Monday Morning Numbers 3/21/11

2011-03-21T07:57:00.000-07:00

I don't know about you, but my brackets are completely shot. I will at least lay claim to having Richmond & Florida St. in the Sweet Sixteen. Of course, I also have to lay claim to having Pittsburgh and Purdue in the Final Four... Oh, to hell with it, let's look at some numbers:

Active Listings: 142

Contingent Listings: 35

Pending Listings: 40 (18.4% of the inventory)

New listings: 11

Months of inventory: 7.3
Click here for the updated price per square foot chart.

For the first time since April 2008 we are above 7 months of inventory. A big part of that is due to slow first quarter sales so far this year, although our raw inventory is up quite a bit from what we've seen for the past couple of years. The silver lining here might be that our pending sales have started to edge up over the past couple of weeks.

I still haven't figured out the topic for later this week. When inspiration strikes me, I'll come up with something and bang it out for you.

Focus on Country Club & Mesa Oaks

2011-03-19T14:39:00.001-07:00

This week we're updating activity in our two traditional high end neighborhoods, Mesa Oaks and the Country Club. For a little background on these areas and a description of the homes included, go back and check out my first post on them from a couple of years ago.

It's kind of funny - last time I reported on these areas I noted that it appeared that we had some increasing inventory despite an overall market trend to lower inventory. This time around, we've switched that. Now we have a somewhat decreasing inventory level despite an overall market trend to increasing inventory. As of this afternoon we have 11 active units on the market. Distressed properties aren't a big chunk of that at the moment with no active REO listings (although one did just expire and will probably come back soon) and only 3 short sales, leaving us with 8 traditional sellers on the market.

Sales activity has been a bit better than it was last time I reported on the area. We only have one contingent sale at the moment - an REO. There are 4 pending sales, one of which is an REO and the other 3 traditional sales. We've had 6 sales in the area over the past three months, and this time it looks like we're a little heavier on distressed properties (3 REO/1 SS/2 Trad). Comparing the past three months with the previous three months, it appears that we've been pretty flat in prices, but that's based on a pretty small sample size.

Next week I'm thinking I'll have to get outside the box and come up with something new to write about. I'm just not sure what that's going to be yet. You'll find out when I do, I guess.

Monday Morning Numbers 3/14/11

2011-03-14T08:12:00.000-07:00

Good morning once again! Anybody have any tips on filling out brackets this year? Because I looked at them last night, and I could see any number of toss-up games this time. Should be a crazy few weeks. Let's take a look at this week's market stats:

Active Listings: 140

Contingent Listings: 38

Pending Listings: 36 (16.8% of the inventory)

New listings: 14

Months of inventory: 6.8
Click here for the updated price per square foot chart.

Our inventory continued to increase this week on another strong week for new listings. We've had 31 new listings over the past couple of weeks, which is the highest two week total we've seen in quite a while. Of those, 9 were REO listings. On the surface that doesn't sound like a lot, but that's a higher percentage than we've been seeing so far this year.

Later this week I'll cover Mesa Oaks & Country Club activity.

Focus on Foreclosure Activity

2011-03-12T13:57:00.000-08:00

Hey, remember a while back when we were hearing about this huge wave of foreclosures that were set to hit? And remember me telling you that I really didn't think it was all that big a thing locally? Well so far, it appears that I'm right. I like it when that happens.

Foreclosure activity has been relatively choppy over the past few months - we'll frequently get a month where one of the indicators is up, then a month where it drops off. On the whole, we've been fairly stable. There are a couple of things that might indicate a bit of an increase in new REO listings coming on the market. Let's start with a chart.

I've published this chart periodically over the past couple of years, so it might look familiar if you've been reading this blog. If you look at that red line that stands out from the rest of it, you'll see that our unresolved trustee's sales have gone back up to around the peak level after dropping off a few months ago. That's one of the key indicators that I look at when I'm trying to forecast what we're going to see in terms of REO listings over the next several months. That trend would indicate a potential increase in foreclosures ahead.

One of the other things that I keep an eye on are properties that have gone back to the bank but have not yet been listed. I kind of wish that I'd started running that number monthly a while back so I could chart it. But I didn't - it's so unlike me to miss an opportunity to chart something - because it's a little bit of a chore to reconcile that list regularly. But I can tell you that if I did chart that number, it would be a pretty flat chart. Since I started looking at it back in March 2009, that number has tracked very steadily between 55-65 units. As of today, we're at 64 units, which is on the high end of the scale. What I've usually seen when it gets to about that level is a small spike in REO listings over a few weeks. So there's another indication that we could see a few more bank owned properties coming in the shorter term.

As of this afternoon, REO listings only account for about 19% of our combined active and contingent listings, and about 40% of our pending listings. Both of those numbers are pretty close to where they've been for a few quarters now. And year to date, only about 23% of all new listings that have come on the market have been REO's. That remains pretty close to where it was when I last looked at these numbers back in September, and down significantly from a couple of years ago.

Even though I'm seeing what looks like some potential for a modest increase in REO listings in the next few months, I still don't see the big wave coming at us. I should caution, however, that we still have a significant equity shortfall in our market, with still around 40% of our homes having more debt than value. But I've said this repeatedly and I'm sticking to it: We're more likely to see a big increase in short sales ahead than REO's.

Monday Morning Numbers 3/7/11

2011-03-07T08:59:00.000-08:00

Good morning, Happy Monday, and laissez les bon temps rouler! (Mardi Gras is tomorrow, for those who don't know.) Let's take a look at our market stats for this Fat Monday:

Active Listings: 133

Contingent Listings: 40

Pending Listings: 33 (16.0% of the inventory)

New listings: 17

Months of inventory: 6.6
Click here for the updated price per square foot chart.

A pretty big week for new listings brought our inventory level back up to about the level it had been two weeks ago. It was kind of an odd thing to watch as it developed - for about 2-3 days, we got a big influx of listings, then it stopped for a couple of days. Distressed properties make up the bulk of the new listings with 5 REO's and 7 short sales in the mix.

Speaking of distressed properties, the topic for later this week is foreclosure activity. I'm waiting for some numbers that I typically see around the 10th or 11th of the month, so it might be Friday or Saturday before I post that. Make sure you check back in late in the week.

Focus on North Lompoc

2011-03-03T17:32:00.000-08:00

This week we're back around to taking a look at a market area, specifically the north side of the city. For a little background on the area, refer back to my first post on the area from a couple of years ago.

We've been gaining a little bit of inventory in this area in recent months. As of this afternoon, we have 14 active listings - 2 REO's, 6 short sales, and 6 traditional sellers. We also have 8 contingent listings, and as per usual they are dominated by short sales (7 of those and one REO).

Sales activity has slowed considerably since I last reported on the area back in September. We only have 4 pending units in the area (0 REO/1 SS/3 Trad), and we've had 7 sales in the past three months (2 REO/4 SS/1 Trad).

Because sales have dropped off as much as they have, it's a little difficult to nail down a price trend. On a pretty small sample, it would seem that we're seeing a slight decline in prices in the area.

Next week I'll get out an update on foreclosure activity in our market.

Monday Morning Numbers 2/28/11

2011-02-28T08:00:00.000-08:00

Been fighting a cold for the past several days. The upside is that I get this real deep, sexy Barry White voice going on in the mornings. "Can't get enough of your love, baby." Yeah, OK, maybe that doesn't work so well for me... Let's stick to what I do - here are this week's numbers:

Active Listings: 124

Contingent Listings: 41

Pending Listings: 36 (17.9% of the inventory)

New listings: 8

Months of inventory: 6.1
Click here for the updated price per square foot chart.

A week ago active listings jumped up a bit and pending listings declined. This week it appears that we've gotten back to about where we had been before for the past several weeks. Our pending listings are still kind of weak as a percentage of the total inventory, so we'll want to keep an eye on that.

Later this week I'll be back with an update on North Lompoc.

Getting Through the Loan Process

2011-02-23T15:52:00.000-08:00

If you believe everything you see on TV, you'd think that nobody can qualify for a mortgage anymore. And if you've read this blog for any period of time, you've probably heard me say repeatedly that you shouldn't believe everything that you see on TV. The fact is, people are still qualifying for loans all the time. I guess the key thing here is the word "qualifying". There was a time not that long ago when you really didn't have to do much to qualify for a loan. And of course, we all know how that turned out...

So you wanna buy a house, and you don't have a couple of hundred thousand in the bank. Here are a few ideas on how to best get through the lending process so you can get from Point A to Point B:

#1 - Use a local lender.

No, wait, that didn't come off quite right - let's try that again:

Use a local lender!

Much better. One of the most common mistakes that I see from buyers is their insistence on using an out of town lender. They figure that they'll get a better rate (they won't) or that they'll do their friend/cousin/cousin's friend in Omaha a favor and shoot him some business. Maybe they have an out of town bank or credit union that they've always done business with and feel some sense of loyalty. In any case - you want to blow up your deal? This is a real good way to go about it. Out of town lenders are much less responsive, and they typically aren't clued into the local processes and customs. And when things start to get a little sideways - and trust me, that can be very common - you're going to want either yourself or your agent in close contact with someone who is competent. And not of small import here is the fact that the local lender relies enormously on repeat and referral business, and at least in this part of the world that is reflected in their performance. You think that some internet lender cares much about referral business?

#2 - Know your credit. Do you pull your credit report periodically to scan it for potential red flags and incorrect entries? You should. As qualification requirements have gotten tighter, credit scores have become more and more critical. And there are specific cut-off points for most loans, and even a couple of points one way or another can be the difference between qualifying or not.

#3 - Don't argue with the lender, just provide whatever he/she asks for. Even if you already gave it to them a few weeks ago. Give it to them again. And be ready to do it again in a few weeks. And don't be shocked if they come up with something new to ask for a few times through the process. Like I said, we aren't in the 2004 market anymore, so the lenders are really ratcheting down the qualifications these days.

#4 - Lock up your credit cards after you go into escrow. You should get this advice from your agent and lender as well, but just in case they missed telling you this... You need to know that your credit will get pulled again late in the game, right before the loan funds. And if you've gone out and bought new furniture for the new house on credit during escrow, you might just tip your ratios and/or credit score over into "no loan for you" territory.

#5 - Use a local lender. I know I said that already, but it's important enough to repeat.

None of this stuff is brain surgery. Some might argue that things have tightened up a bit too much over the past few years, but I'll be honest: I'd rather be here than where we were back in the days when all you had to do to get a $500K mortgage was fog a mirror in the presence of a loan officer. This is sustainable. This is healthy. Owning a home is something to be earned. It isn't a birthright.

Monday Morning Numbers 2/21/11

2011-02-21T08:55:00.000-08:00

Good morning everyone. We got pulled out of town for most of last week, so I'll have to get you that post on surviving the loan process later this week. Not a pleasure trip, I'll just leave it at that. At least it appears that we missed the nasty weather. Let's take a look at this week's market stats:

Active Listings: 131

Contingent Listings: 37

Pending Listings: 33 (16.4% of the inventory)

New listings: 12

Months of inventory: 6.4
Click here for the updated price per square foot chart.

We had a moderate spike in our inventory and a dip in our pending sales last week. Those were the first noticeable changes that we've seen in several weeks, and coming weeks will tell us if those numbers were temporary blips or the beginning of a trend.

Like I said, come back later this week and I'll get you that post on the lending process.

Monday Morning Numbers 2/14/11

2011-02-14T06:35:00.000-08:00

Happy Valentines Day! Hope everybody gets a chance to spend it with someone special. Let's take a look at our numbers for this week:

Active Listings: 122

Contingent Listings: 38

Pending Listings: 41 (20.4% of the inventory)

New listings: 9

Months of inventory: 6.3
Click here for the updated price per square foot chart.

Our months of inventory edged up a little bit this week due to slower sales, but the raw inventory numbers haven't changed much for several weeks now. Come back later this week and I'll talk about some tips to help buyers get through the loan process.

Focus On Central Lompoc

2011-02-09T15:20:00.000-08:00

This week we're back into looking at a neighborhood, and we're back around to Central Lompoc. For some background on the area, take a look at my first post on the area from a couple of years ago. Good grief, have I been writing this blog for two years now?

We have an interesting mix of numbers here this time around. We have 20 active listings on the market this afternoon, and unlike what I've been reporting for the area in the past, only 4 of these are REO's. 7 are short sales, and 9 are non-distressed. We do have 9 contingent sales in the area, and all of those are distressed (1 REO/8 SS).

Sales were slow for a while here, but appear to be picking back up. We have 13 pending sales now (4 REO/4 SS/5 Trad), again pointing to a little bit of a slowdown in distressed property activity here. But over the past three months, we've only had 13 total sales (8 REO/3 SS/2 Trad).

It would appear from the sold units in the past three months that we're seeing a little bit of a decline in values. But some of that is due to a lower overall level of sales than we've typically been seeing here and a higher percentage of REO sales over those three months. We sold just about half as many units here in the past three months as we sold in the previous three months, and any time you get a spike in the REO percentage of sales, you're almost bound to see some decline in values. On the other hand, with a lower percentage of our current active and pending listings being REO's I would expect to see some rebound in values a few months from now.

I still haven't figured out next week's topic, but I'm sure I'll come up with something between now and then. See you here next week.

Monday Morning Numbers 2/7/11

2011-02-07T08:04:00.000-08:00

Well, that was a lackluster ending to the NFL season. An OK but not great game (and as a Bears fan I'm wired to hate the Packers). Probably the lamest batch of ads that I can remember. And that halftime show? Well, I'll just say that I'm probably not the target audience. And now we gotta wait 7 months to see any meaningful on-field action, if they can figure out the labor agreement thing.

OK, let's get to what you came here for:

Active Listings: 121

Contingent Listings: 38

Pending Listings: 39 (19.7% of the inventory)

New listings: 12

Months of inventory: 6.0
Click here for the updated price per square foot chart.

Another week, another similar looking set of numbers. We did see some more new listing activity this week, and it's interesting to note that out of those 12 new listings, there wasn't a single REO. I suspect that we'll see a minor run of REO listings sometime in the near future, because my running list of unlisted REO properties has edged up to the mid-60's. That's on the high side of where it tends to be. In the past when it gets up to that level we usually get a little bit of a run of them.

Later this week I'll take a look at activity in the central part of town. That's usually a good one to check in on because it's probably our highest volume area, and I can do a better job of spotting market trends.

A short sale rant...

2011-02-03T15:57:00.000-08:00

If you've been reading this blog - or any other real estate resource - for the past couple of years, you've been hearing a lot about short sales. I've been telling you for a while that we're seeing a slow increase in the market share for short sales, and I've been expecting that to continue. And now, I'm going to spew a little bit of bile on the subject.

One of my pet phrases when I'm trying to work with an intractable short sale lender is that I'm performing what I like to call a "Cranial-Rectal Extraction" (CRE) on them (well, not to them directly - that wouldn't be very tactful or productive). I've had some success doing that in the past, but it seems that more recently, but with some of these, we're gonna have to break out the jaws of life to get that done.

Look, I've said this before, and I'll say it again - short sales aren't the absolute hopeless mess that they were in 2007 and 2008. But you know what? The progress being made by the major lenders has been pathetically slow. We've been in this mess for a long time, and they've had 3 or 4 years to figure out how to deal with this and fix their processes. And they haven't. I keep hearing things from them that they're improving their processes, and frankly I'm reminded of those Domino's ads that were running last year. You remember those? The ones where they acknowledged that they were making some crappy pizza in the past, but now they've reworked their recipes and they're making some really good pizza now?

Well, you know what? When it comes to short sales, the major loan servicers are still making some pretty crappy "pizza".

It's not just me. I spent most of last week down in San Diego at the California Association of REALTORS® Winter Meetings, and short sales were probably the biggest topic of discussion. And the discussions that I heard at various meetings weren't exactly filled with nice things. From senior leadership all the way down, I was hearing a lot of frustration with how these things are working. I heard more than one of my fellow directors making noise about pulling all of their business - everything from loan referrals to their own personal banking - from banks that shall remain nameless in this space. I heard one or two of them echoing something that I've had occasion to ponder myself: they were about to make a personal business decision to swear off ever touching a short sale where (insert name of your least favorite lender) is involved.

I know, I know... These are complicated transactions, the loan servicers have to answer to the investors that actually own these mortgage notes (and there are tons of those). And there are also second lien holders and mortgage insurance companies to deal with on these transactions. And I don't care. I'm tired of hearing that they're getting better, and I'm even more tired of hearing why they can't fix things.

I've made this point here before: About 40% of all the homes in our market are in a negative equity position. We aren't alone, and in fact there are several areas where that number is much worse. And the primary way we're going to get out of that hole is through property transfers of these negative equity properties. That can happen one of two ways - short sales and foreclosures. And consider for a minute that at least from what I can see, foreclosures sell for about 15-20% less than non-foreclosures. And yet somehow, it seems that we're still seeing way too many situations where short sales get honked up and the property gets foreclosed. And that's not good for anybody.

So what to do? Government intervention? Yeah, that's gonna work... But on the other hand, the free market has failed us horribly on this count, and I can't help but think that if our political leadership could come up with some useful way to standardize the process and hold the banks accountable, at least it couldn't get worse. I suppose that those of us in our industry are going to have to keep engaging the banks, both at a leadership level and down here where the rubber meets the road. And keep working on that CRE - even if we have to break out the power tools.

Monday Morning Numbers 1/31/11

2011-01-31T08:08:00.000-08:00

Good morning! It's good to be home. I like San Diego, but being on the road without Diane gets to be old pretty quickly. Let's take a look at our market stats for this fine Monday morning:

Active Listings: 118

Contingent Listings: 35

Pending Listings: 40 (20.7% of the inventory)

New listings: 6

Months of inventory: 5.8
Click here for the updated price per square foot chart.

Another week with very minimal change in our market stats. New listing activity was slow for the second consecutive week. We're on another one of those plateaus that we seem to find pretty frequently. I suspect that we won't stay this low in listing activity indefinitely, but we're coming into a period where we typically see more sales activity as well.

Come back later this week, and I'll have a few choice words about short sales. I'll try to keep the language family friendly.

Focus On Southside Lompoc

2011-01-28T18:33:00.000-08:00

Greetings from beautiful & sunny San Diego. At least I'm assuming that it's sunny - I've spent almost all of the past couple of days holed up in meeting rooms at our California Association of REALTOR® business meetings. At least I get to go out and wander around the Gaslamp Quarter a bit at night.

Before I head out and get a bite to eat tonight, I thought I'd take a little time out for you, my loyal readers (hey, there might be more than one), and give you a neighborhood update on the Southside. For some background on the area and a , you can refer back to my first post on it from a couple of years ago.

We actually have a fair bit of inventory here at the moment, and here's something I don't get to report every day: None of our active listings are REO's. We have 15 active listings, and 5 of them are short sales, and the rest are non-distressed sales. That changes a bit when we look at the sales activity, however.

We have 6 contingent sales in the area (1 REO/5 SS) and 4 pending sales (2 REO/2 Trad). Sales over the past three months have been a little light, with 9 sold units (4 REO/2 SS/3 Trad). It's kind of interesting to look at that - at least for now, it seems that we've eaten through a fair bit of our distressed inventory here. I'm sure we'll see more REO's in the active listings, and it probably won't be all that long before a few come on. I can identify 7 properties fitting the criteria I'm using here that have gone back to the bank but are not yet listed.

Looking at values, it appears that despite an increase in REO's in the sold units, prices have remained fairly flat overall in the area. No big surprise - the market as a whole seems to have stabilized at a pretty good, affordable level over the past 12-18 months.

I think I'm going to get on my soapbox next week and rail about some short sale issues. I haven't had a good rant in a while... You don't want to miss that.

Monday Morning Numbers 1/24/11

2011-01-24T07:36:00.000-08:00

Well, that wasn't so good now, was it? I wonder if Caleb Hanie has any idea of how close he came to never having to buy a drink in Chicago? At least now you won't have to read about Bears football when you come here. At least until September...

Let's take a look at our market stats for this week:

Active Listings: 119

Contingent Listings: 36

Pending Listings: 45 (22.5% of the inventory)

New listings: 5

Months of inventory: 5.9
Click here for the updated price per square foot chart.

Inventory dropped slightly in a week with very light listing activity. Other than that - say it with me - no big changes this week. Part of the reason we had light listing activity was that we had no new REO listings for the week, and only one of the five was a short sale.

Since I didn't get the Southside update done last week, I'll see if I can get it in early this week. I'm headed down to San Diego to do the state director thing this week, but I should be able to fit in a little bit of blog work.

2010 Year In Review

2011-01-20T09:40:00.000-08:00

I love it when I can get a news story to lead right into something that I was going to blog about anyway. Today we got a report from the National Association of REALTORS® that 2010 had the lowest number of home sales since 1997. And once again, I get to point out that the real estate market is best looked at on a very local level.

When I look back at 2010 in the Lompoc Valley real estate market, I see it more in terms of two halves than as one whole. We had a very active first half of the year with very low inventory, and a relatively slower second half with inventory numbers edging up. On the whole, we had 431 sold units in 2010, which is almost identical to the numbers that we saw in 2008 (433) and 2009 (427). We had our "sky is falling" year back in 2007, when our volume dropped to 260 for the year. You know, what the heck, let me graph that for you by quarter. You know I loves my graphs...

Wow, look at 2006 & 2007 in that graph. You want to talk about weak home sales - that's downright anemic. So sure, the national numbers dropped off this year. I guess we were ahead of that trend here by a few years.

Let's get back to 2010. Even though the overall numbers are very close to the previous two years, when we break it down, it looks like we were much stronger than 2009 in the first half of the year, and much weaker in the second half. There's a very easy explanation for that. Those home buyer tax credits that the feds (and to a lesser extent, the state) worked like gangbusters. Those are gone now, and with the federal and state budgets being the train wrecks that they are right now, I wouldn't hold my breath for them coming back anytime soon.

Distressed properties continued to dominate the market, but not quite to the extent of the past couple of years. REO sales accounted for 48.5% of last year's sales, and short sales were at 20.1%. The REO numbers were down from 62.3% in 2009 and 59% in 2008 (although I didn't have CCRMLS numbers when I ran the 2008 numbers, so that was probably a bit higher). Even though short sales didn't gain as much ground as I thought they might, they still increased in market share from 13% in 2009 and 7.4% in 2008).

As the year went on, our raw number for inventory increased, as you'll see from this chart. I'd call it an explosion of inventory, except that it was so low to begin the year that we almost had nowhere to go but up at the beginning of the year. Our months of inventory also jumped. Both of those measures seem to have stabilized over the past couple of months, and we're at about a level where most in our industry think of as a balanced market.

What caused the inventory to rise? Well, the decreased number of sales in the second half of the year was a big contributing factor. And we saw a little heavier listing activity than we saw the previous year with 566 new listings on the market (up 11.4% from 2009). 32.3% of the new listings that came on the market were REO's, and 28.8% were short sales.

Looking ahead, the forecast is a little hazy. I'm pretty sure that we're going to continue to see the lion's share of our activity centered around distressed sales, and it seems likely that we'll continue to see a rise in short sales. Overall our prices have been flat for quite a while now, although it does seem like the higher price ranges might still be declining a bit while we might be seeing a mild recovery in the entry level houses. I suspect that if our employment stays status quo, our prices will likely stay pretty stable. I am a little concerned about interest rates - there is a lot of speculation that they'll start climbing again sometime this year. But you know what, I've been hearing that for two years now. It does seem inevitable that we'll see some upward movement in rates - c'mon, under 5%? Are you serious? And we've been here for quite a while. I doubt that a modest increase would have a big impact on our market, but if they get into the 6 range again, we could have a problem.

I'm working on Saturday (but not Sunday due to the Bears/Packers game), so I'll see if I can work in a Southside update for you.

Monday Morning Numbers 1/17/11

2011-01-17T07:34:00.000-08:00

Oh, baby. Bears. Packers. NFC Championship. Sunday. Oh, baby.

Let's take a look at our market stats for this beautiful Monday morning:

Active Listings: 125

Contingent Listings: 35

Pending Listings: 44 (21.6% of the inventory)

New listings: 14

Months of inventory: 6.1
Click here for the updated price per square foot chart.

We've had a pretty busy first two weeks of the year for new listings. The big bulk of these have been distressed sales - 6 of the 14 last week were REO's with another 4 short sales. But when I look at the four non-distressed listings that came on last week, it looks like 2 of them are investor flips of properties purchased either as trustee's sales or REO properties.

Since I didn't get to the 2010 wrap-up on Saturday, I'll try to get to it early this week, and then I'll see if I can fit in a neighborhood post later in the week.

2010 Fourth Quarter Update

2011-01-13T15:28:00.000-08:00

Another quarter has gone in the books, and it's time again to step back and take a look at what happened in the Lompoc Valley real estate market over the past few months. My Monday Morning Numbers posts are great for keeping an eye on what's happening right now in the market, but I'm always happy when this time rolls around and I can step back and take a more comprehensive look at where we've been for the past few months.

Looking back at the fourth quarter, I'm seeing some changes that make me think that our market is shifting in some ways. For the most part, we're continuing to bounce along at about the same level as we have for quite a while now in terms of price. As I get into these numbers, I'll remind you that the first set of data that I have for you here is combined information from our local Lompoc Valley Association of REALTORS® MLS and Central Coast Regional MLS. Then I'll have a breakdown of some data that's just too time intensive to combine, and only comes from LVAOR.

We had a fairly light amount of activity last quarter with 94 sold units, down 22.3% from the same quarter in 2009. You may recall that we were down a bit back in the third quarter as well after a robust level of sales in the first half of the year. The tax credits that were being offered for home buyers drove a lot of demand, and when they expired we saw some decline in demand. We've gotten to a point now where the balance of inventory and demand is pretty much in line with historical norms.

Price levels still seem to be pretty stable when viewed across the board, as you'll see from this updated price per square foot chart. We edged up very slightly to about $142 per square foot on average in the market. The median price for single family home sales (not counting condos) jumped up a bit more to $229,900. When I look at those two charts, the thing that jumps out at me is how flat we've been for the past couple of years. I've said in the past that even looking at these numbers in an active quarter, we have a limited set of data. So I wouldn't put a lot of stock into any individual point on either of those charts, but over time they do a pretty good job of showing us some trends.

Looking at the mix of distressed and non-distressed sales, it appears that we're seeing a somewhat lower level of distressed property sales in our market. That said, distressed sales still dominate the market, with REO's accounting for 40.4% of sales, and short sales taking 20.2%. Neither of those numbers was significantly different from last quarter, but looking back a year things looked a bit different. In the fourth quarter of 2009, distressed sales combined to account for 75% of our market. A lower level of distressed sales - especially REO sales - would be a big boon to values in our market.

Now we'll get into the LVAOR-only numbers:

We saw a little shift in how sales were financed in the last quarter. Government backed loans continued to gain market share, with FHA accounting for 37.3%, and VA loans at 26.5%. Cash dropped off a little bit, down to 16.9% of the market, leaving us with 19.3% of the market financed with conventional mortgages. I suspect that there is a strong correlation between the drop in cash sales with the lower level of REO sales.

One of the things that results from shifting from a low-inventory market to a more balanced market is that market times get longer. We had a noticeable increase in median days on market for the fourth quarter, up to 36. That's not surprising given that we've seen an increase in inventory and a lower level of sales. Escrow times moved up a little bit as well to a median of 49 days. I would attribute that to a decrease in the number of cash transactions, which are typically much shorter escrows.

Another thing that shifted noticeably with the change in the market is the percentage of sales at or above list. Up until this quarter, we had been running in the 60-65% range for this measure for quite a while. In the fourth quarter, it dropped down to 41.5%. That's still a pretty respectable level. We aren't seeing multiple offers quite as frequently now as we were a year ago, so this is just another indication that things have settled down a bit.

I'm going to try to make time on Saturday to do a full year wrap-up of 2010. I've got some stuff on the schedule that might keep that from coming together, though, so it might slide to next week. Hey, it'll give you something to look forward to.

Monday Morning Numbers 1/10/11

2011-01-10T07:07:00.000-08:00

Another new week dawns, and with it comes a fresh look at some Lompoc Valley real estate market stats:

Active Listings: 120

Contingent Listings: 37

Pending Listings: 42 (21.1% of the inventory)

New listings: 15

Months of inventory: 6.1
Click here for the updated price per square foot chart.

Let's start a pool - how many times will I write "no big changes this week" in 2011? But here we are - most of these numbers are pretty close to where they've been over the past few weeks. We did have a pretty big week for new listings this week, and a small uptick in properties under contract for sale (contingent and pending). Distressed sales were big again this week among new listings, with 4 REO's and 6 short sales.

Over the next few days I'll be cobbling together some of the 4th quarter market numbers for a wrap-up of that quarter, and then I'll have a 2010 year in review shortly after that. Come back later this week for those posts.

Focus On Mission Hills

2011-01-09T14:19:00.000-08:00

OK, so my mid-week post is late again. I was out of town for most of the week. So shoot me. Let's take a look at the activity in Mission Hills this week. For some background on the area, check out my first post on the neighborhood from 2009.

For the first time that I can recall since I started writing these area specific "Focus On" posts, I have a neighborhood that is completely, 100% saturated with distressed property activity. Part of that might be because it's been a very light activity area. So light, in fact, that I had to expand out to my secondary MLS to find a couple more properties.

We have a whopping 2 active listings on the market here at the moment, 1 REO and 1 short sale. Contract activity is a little sparse as well, with 2 contingent listings (both short sales) and 3 pending sales (2 REO/1 SS).

Sales activity has been high relative to those numbers, with 7 sold units in the past three months (6 REO/1 SS). For quite a while, it seemed like this area was holding value a little better than the rest of the market, but right now the numbers would indicate that we might be seeing some price erosion. A big part of that goes to property condition, though. Most of these sales have been pretty rough. Most appraisers will tell you that they try to avoid using REO properties in an area when appraising a short sale or traditional sale, but when an area is saturated they have to use them and try to adjust. If 6 out of 7 doesn't qualify as saturation, I don't know what does.

Next week I should be getting the 2010 4th quarter wrap up together, and possibly the 2010 year in review right on its heels. Make sure you check in for that. I'll try not to keep you waiting until Sunday again...

Monday Morning Numbers 1/3/11

2011-01-03T07:19:00.000-08:00

Happy New Year! Hope you didn't overindulge on Friday night - or if you did, at least that you've recovered by now. Let's take a look at our first market stats of 2011:

Active Listings: 122

Contingent Listings: 32

Pending Listings: 40 (20.6% of the inventory)

New listings: 9

Months of inventory: 5.9
Click here for the updated price per square foot chart.

It might be a brand new year, but these look a lot like last year's numbers. We had more new listings last week than I would have expected given that it was a holiday week. My first thought would have been that they were heavily REO listings, but no - 6 of the 9 were short sales. Interesting. It used to be that we would see a whole bunch of expired listings at the end of the year, and our inventory would take a minor dip. But the old norms have gone out the window in this market, as I've said a few times in the past.

I didn't get to a mid (or even late) week post last week. C'est la vie. Later this week I'll work on an update on Mission Hills activity.

Monday Morning Numbers 12/27/10

2010-12-27T07:32:00.000-08:00

I hope everybody had a great Christmas. We had a very nice little low-key celebration ourselves, which is just the way we like it. One last time for 2010 - let's take a look at our market stats:

Active Listings: 122

Contingent Listings: 36

Pending Listings: 37 (19.0% of the inventory)

New listings: 6

Months of inventory: 5.9
Click here for the updated price per square foot chart.

No big changes again this week to report. It seems like I say that a lot, but when you look at it you can see that things have changed considerably since the beginning of this year. We have about 50% more inventory - both in raw numbers and months - than we had at the beginning of the year. We've gone from being a very low inventory seller favoring market to a more balanced level. How will things look a year from now? Hey, you'll just have to wait to find out.

I still have to come up with something to write about for later this week, but I'm sure I'll come up with something. And then I'll see you back here next week for a look at the first market stats for 2011.

Focus On Newer Construction

2010-12-22T11:20:00.000-08:00

This week we're taking a fresh look at what's happening with newer construction homes in the Lompoc Valley. As a refresher - what I mean by "newer construction" is resale homes (not sold by the builder) built since 2004.

As I've said a few times here, this is a segment that has been hammered hard with distressed properties. When you think about it, you'll understand why - the big bulk of these are homes that sold at or near the peak of our market, and a lot of them were sold with some pretty risky financing. That's a perfect recipe for distressed properties.

We have a moderate inventory of these homes on the market this morning, with 15 active listings. No surprise, distressed sales dominate these with 4 REO's, 10 short sales, and only 1 non-distressed listing currently on the market.

Sales activity has increased a little bit since I last reported on this segment back in July. We currently have 3 contingent sales (2 REO/1 SS) and 3 pending sales (0 REO/1 SS/2 trad). We've had 8 sold units over the past 3 months (2 REO/5 SS/1 trad). I've been expecting to see the mix of REO's and short sales shift to more short sales. This is probably the hardest hit segment in our market, so it's possible that this is a bellwether of things to come. Or it could just be a fluke of a small data set.

The signals are mixed on what we're seeing as far as a price trend on these. It appears from what I've been seeing that this has been the softest segment price-wise in our market. The median sale price on these units has dropped significantly in recent months, but the average price per square foot has been pretty stable. A combination of these being heavy in distressed sales and at a price point that isn't in our "sweet spot" seems to be a drag on values right now for these units.

Hope you all have a very Merry Christmas! See you back here next week. I'm sure I'll come up with something to share with you by then.

Monday Morning Numbers 12/20/10

2010-12-20T07:35:00.001-08:00

OK, here's the deal - if anybody wants my attention today, they need to get me before about 5:30 tonight. Because right about then, I'm sitting down in front of my TV with some 2° Below Ale to watch the Bears play for a chance to clinch their division against the hated Vikings. Seriously - you can call if you want, I'll just let my phone ring. I'm OK with that, because my ring tone right now is "Bear Down, Chicago Bears".

Wait a minute, what does this have to do with Lompoc Real Estate? Not much, I guess, unless I can convince Brian Urlacher to invest in a few properties here. Let's take a look at our market stats this morning:

Active Listings: 123

Contingent Listings: 39

Pending Listings: 38 (19.0% of the inventory)

New listings: 6

Months of inventory: 6.2
Click here for the updated price per square foot chart.

We had a pretty significant decline in our pending listings this week, mostly due to a big week for reported sales with 12. About half of those sales happened a few weeks ago and got reported this week (I say as I shake my fist at my fellow agents who don't report changes in a timely manner). That dropped our months of inventory down a bit, but it also put us at our lowest point for pending sales as a percentage of inventory since March 2009.

Later this week I'll take a look at resale activity on newer construction homes in our market. Until then, Bear Down!

Focus On Short Sales

2010-12-15T16:32:00.000-08:00

You know, there's just nothing to get you into the Christmas spirit better than talking about short sales. Assuming that you are the Grinch or Ebeneezer Scrooge... But here we are anyway. Never let it be said that Dennis Trimble let a holiday get in the way of a perfectly good funk.

I've been saying for several months now that I expect that we'll see short sales increasing their share of our market. So far that change has been slower coming than I expected. I still think we're going to see a change, and I'm a little bit perplexed about why we aren't seeing more of these than we are right now. Where are we right now? Let's go to the scoreboard:

Short sales account for 34.6% of our active listings, 89.5% of our contingent listings, 15.8% of our pending sales, and 25% of our sales for the past three months. All of those numbers except for the pending sales is up noticeably since I last reported on this segment in August. But with that pending percentage down, it probably portends a lower level of these as a percentage of sales a couple of months from now.

Success rates have been pretty stable. We remain at a 47% success rate for short sales, which is unchanged from August. I'm not sure if that will improve, or if we've reached a point where things have peaked in that regard. Some of it will have to do with simple supply and demand. If there are enough available non-short sale listings out there, buyers will most likely go to those first. If that inventory dries up, however, buyers will pretty much have to be looking seriously at these. I do think there is still some progress to be made in our industry, both by agents and lenders. There has been some slow progress made so far, and things have improved incrementally, but we still have some work to do.

We still have an enormous negative equity problem in our market, and that's not going away for a long time. We could see a big spike in employment and incomes locally, which would help drive prices up. But don't hold your breath - the most likely way out of this hole is via short sales. It seems to me an inevitability that we're going to start seeing more short sales sooner or later. I guess it might be coming later than I originally thought.

Monday Morning Numbers 12/13/10

2010-12-13T08:20:00.000-08:00

Good morning again, boys & girls! Time for another look at some market numbers for the Lompoc Valley:

Active Listings: 124

Contingent Listings: 40

Pending Listings: 44 (21.2% of the inventory)

New listings: 13

Months of inventory: 6.9
Click here for the updated price per square foot chart.

We had a pretty active week of new listings considering that we are heading into the holidays. Inventory ticked up a little this week in both terms of raw numbers and months of inventory, but everything else remains fairly stable. 9 of the 13 new listings are distressed sales this week, with 6 of them being short sales.

Hey, speaking of short sales - I'll be updating you on that segment of the market later this week.

Focus On South Vandenberg Village

2010-12-08T16:17:00.002-08:00

This week I'm actually getting around to my mid-week blog post in the middle of the week. What a concept!

We're back around to a look at South Vandenberg Village this time around. For a little background on the area and a description of the homes covered here, check out my first post on the area from early 2009.

For the past couple of years, this has been one of our lower activity areas, and it still is. We have a few more listings up there than we did a year or so ago, but that doesn't mean much. There are 6 active listings here - 2 REO's, 3 short sales, and 1 non-distressed sale.

If you've had a dearth of inventory recently, chances are pretty good that you haven't had many sales either. (Hey, try to find this kind of insight anywhere else!) We only have one contingent short sale and one pending non-distressed property this afternoon. And over the past 3 months, we've seen 2 sold units, both REO's.

As I've said here before, when we have this low level of activity, it really makes it hard to pinpoint a price trend. I can tell you that both of those sold units from the past 3 months needed quite a bit of work, so that would at least on the surface make it look like values have declined a bit.

Next week I'll have an update on short sale activity. Just in time for the holidays!

Monday Morning Numbers 12/6/10

2010-12-06T07:21:00.000-08:00

It's December already? Really?

Let's look at some numbers:

Active Listings: 119

Contingent Listings: 42

Pending Listings: 40 (19.9% of the inventory)

New listings: 7

Months of inventory: 6.7
Click here for the updated price per square foot chart.

That little spike of pending listings that we had a couple of months ago seems to have settled back down in recent weeks. For some reason, it never quite panned out to an increase in sold units - quite to the contrary, they've been declining over the past few weeks. I'm not sure what's going on there. If I can find the time, I might try to analyze what happened there.

Later this week I'll have a South Vandenberg Village update.

Focus On Interest Rates

2010-12-04T12:49:00.000-08:00

Hey, I'm finally getting around to doing that interest rate post! I had taken a look at this earlier this year, and much to my surprise, rates got even better since then. It's just unreal - take a look at this chart.

Back in February when I last posted about this, rates were in the 5% range. From an historic perspective, that's an unbelievably low rate. Since then, a number of things have happened on a macroeconomic level - most of which are way above my level of understanding - and rates fell into the low 4's. It seems in recent weeks that we've started to see a little bit of movement upward. We were looking at 4-4.125% for a little while there, but now we're bouncing around the 4.375% level on FHA/VA loans.

I've been talking to a lot of folks who bought in the last couple of years, and some of them are either thinking about or have done a refinance on their homes to get a better rate. There's a whole calculation to whether or not it's worth doing. Some of it depends on how long you plan on staying in that loan, and some of it depends on your equity position. But you could save a nice little chunk of change every month. On a $200,000 loan, a 1% difference is $2000 per year, or around $167 per month. That's a big difference in a lot of people's household budget.

I'm actually a little surprised that we don't have more first time buyer activity in our market than we do right now. Sure, the tax credits expired. So what? Everything is on sale, and money is cheaper than it's ever been in my lifetime. I seriously doubt that those tax credits are coming back any time soon. And interest rates in the low 4's - are people seriously going to let that slip away? I think that 10 years from now, a lot of the discussions that people will be having about real estate will center on one of these two points: "I'm really glad that I bought a house ten years ago" or "I really wish I'd bought a house ten years ago".

I know there are a lot of people who have been hammered by this economy and simply can't do anything right now. But there are also a lot of folks who can do something now, but are afraid. I get that, I really do. I bought my first home in 1992. For those of you who don't remember that time frame, we were in a recession, unemployment was high and getting higher (does that sound familiar?). How bad was that economy? We elected Bill Clinton over a sitting incumbent despite a sex scandal during the primaries. Let that soak in for a minute... We had just had a pretty brutal round of layoffs at my place of employment. Was I scared? Hell yes! But I acted anyway, and to this day I'm glad I did. A wise man once said in a song lyric "We can live in fear or act out of hope" (John Hiatt, one of my favorites). I would encourage you to act out of hope.

Monday Morning Numbers 11/29/10

2010-11-29T07:56:00.000-08:00

I was going to write a piece Saturday on interest rates. But when I fired up my computer on Saturday morning, it decided that booting all the way up wasn't on the agenda for the day. So my Saturday workday got re-prioritized to rebuilding a laptop. Fortunately, years of computer support experience taught me to have a regular backup, so there wasn't much lost aside from time and patience. That's three times this year that I've had to rebuild this beast. The first two times I'm pretty sure that I know what happened, but this time is a little less clear. One more time and I go buy a gun and take this #$%*&@ out to a shooting range. Anyway, let's get on with some numbers:

Active Listings: 116

Contingent Listings: 44

Pending Listings: 43 (21.2% of the inventory)

New listings: 6

Months of inventory: 6.4
Click here for the updated price per square foot chart.

No big changes this week. 6 new listings is a little higher than I would have guessed, but as it turns out 5 of those were REO's.

Later this week I'll try to work on that interest rate update.

Monday Morning Numbers 11/22/10

2010-11-22T07:11:00.000-08:00

Monday again. Here we go:

Active Listings: 112

Contingent Listings: 50

Pending Listings: 44 (21.4% of the inventory)

New listings: 8

Months of inventory: 6.4
Click here for the updated price per square foot chart.

Raw inventory fell off a little bit more this week, but our months of inventory remained steady, along with our level of pending sales. One thing that I've noticed over the past month or so is a noticeable increase in the level of contingent sales. These are most typically short sales that are awaiting approval from the lien holders. That might be an indication that we'll be seeing an increase in the percentage of short sale closings in the next few months.

It's Thanksgiving week, and this is typically one of the lower activity weeks of the year. I'll probably come up with something to babble about late this week, probably Saturday. I gotta have something to do - it ain't like you could get me within a mile of a major shopping center this weekend.

Every day I drive past a church on Ocean Avenue, and they have a marquee sign that usually has something witty or insightful. For the past week or so, it's had "Thanksgiving is good. Thanksliving is better." I'd have to concur with that. Here's wishing you all a Happy Thanksliving!

Focus On North Vandenberg Village

2010-11-20T15:51:00.000-08:00

This week the wheel makes another complete turn, and we're back to the beginning of our neighborhood focus cycle with a look at activity in North Vandenberg Village. For some background on the area, go back and check out my first post on it from last year.

This has been a relatively light activity area for a while, and things haven't exactly picked up over the past few months. We have a total of 8 active listings on the market here as of this afternoon (2 REO's, 2 short sales, and 4 traditional). That's essentially unchanged since I last reported on the area in June. Sales activity has been modest. We currently have 4 contingent sales (all short sales) and 2 pending listings (1 REO & 1 trad).

The past three months have seen 6 sales in the area (3 REO & 3 trad). That's not a lot, really, but it's not too bad considering the low inventory level. We appear to have a little more activity on distressed properties now than we had this summer. It's a little hard to nail down a price trend there on these numbers, especially given that the area is varied in price and size of houses. It does appear that some of the recent sales that we've seen were a little more in need of some TLC, so that might be bringing things down slightly.

Next week I'm not sure what I'll be posting for my mid (OK, late) week post. It's Thanksgiving weekend, so maybe it'll just be some ramblings from a drunk and bloated middle-aged guy. Kind of like your crazy uncle that no one wants to sit next to at Thanksgiving dinner. Or maybe I'll come up with something good. You'll just have to wait to find out with me.

Monday Morning Numbers 11/15/10

2010-11-15T06:56:00.000-08:00

Here we are again. Another Monday morning, another cup of coffee, and a fresh set of market stats to start off the week:

Active Listings: 118

Contingent Listings: 45

Pending Listings: 45 (21.6% of the inventory)

New listings: 6

Months of inventory: 6.4
Click here for the updated price per square foot chart.

The raw number of active listings dropped a fair bit this week, partly due to the fact that our new listing activity was a little slow. But look at that months of inventory number - it actually went up this week despite that decrease in active listings. How does that happen, you might ask? It's because we've had a slower sales over the past few months. For the uninitiated, the way I calculate that number is adding the total active and contingent inventory, then using three months of sales to calculate how long it would take us to sell all of those listings at our current sales rate. This week's number for 3 month sales is at it's lowest point since March. I expect that we'll start to see that increase a bit soon because we had an increase in pending listings a month or two ago. But then that settled back down, so it's not going to last for a long time.

Later this week I'll be updating activity in North Vandenberg Village.

Inside the Life of a REALTOR® - Working on Commission

2010-11-11T10:57:00.000-08:00

I'm sure that many of you love to watch TV. I know I do, at least sometimes. And if you're interested enough in real estate to be reading this blog, I'll go out on a limb here and say that you occasionally like to watch shows on channels like HGTV that feature my chosen profession. I've seen some of those shows. And I'll let you in on a little secret: Like most other stuff that passes for "reality" on TV, it's usually a load of BS. So what I thought I'd start this week is an occasional look into how things in our profession really work.

I'm going to start it off this week by giving you some insight into how we actually make money. I know that there are a lot of interesting ideas that the public has about that topic. I'll sometimes talk to someone who will enviously tell me "Gee, you guys get 6% of every transaction that you work. All you have to do is sell 5 or 6 houses a year, and you're rolling in the dough". I wish that were true. At an average sales price of around $200,000, that would be $12,000 in my pocket every time I closed a transaction. Sweet.

Before I go any further here, I want to make something very clear. None of what I'm about to share with you here should be read as any kind of complaint. I love what I do, and I wouldn't want to do anything else for a living. I just want to educate you on how this really works.

The truth is somewhat less lucrative than that $12,000 figure might lead you to believe. Here's the reality: Let's say that we have a very typical (for our market) $200,000 transaction. I have the listing, and someone from another office brings us a buyer. Most of the time we set these up on a 6% commission (there isn't a "standard" rate, but that's pretty typical). In order to actually get the other agent to sell this property, we have to be offering them compensation - almost always half. Now I'm down to 3%. $6,000 still seems like an OK deal, right?

But wait a minute - I don't own my office. That listing that I have isn't really my listing from a legal standpoint. It belongs to my broker. That 3% is, technically speaking, his share of the deal. He's got an office to keep open and he has expenses just like any other business. So the way this typically works, each agent has an agreement with their broker on what is known in the industry as a "split". That split depends on the broker's policy and a negotiation between the broker and his/her agents. Every office has their own policy on this. What we usually see is that newer agents get somewhat lower splits, sometimes as low as 50-55%, and as agents get more productive, those splits increase. In the case of the very top end producers, they'll often have splits in the 85% or more range.

Let's use a 70% split as an example. That $6,000 just became $4,200. But that still isn't what's going to be in that commission check. There are usually other fees to be paid in there for which could include office fees for things like a transaction coordinator, errors and omissions insurance, franchise fees, etc. So the check gets a little smaller, probably under $4,000. Now, it is possible that you can avoid this whole split issue in this business by getting a broker's license and striking out on your own. There are a few independent brokers in our market that have had varying levels of success. You can go that route and keep more of that commission for yourself, but you aren't going to have the name recognition and national advertising of a franchise behind you.

But there's more! There are a lot of ongoing fixed costs associated with just being in this business. We have licensing fees, association fees, MLS membership fees, and so much more. And most offices have some form of desk/technology/resource fee that we pay regardless of our transaction level. And we have general business expenses as well. And if it's a short sale and the lien holders cut the commission? Smaller payday. If that deal goes south and doesn't close? No payday.

And let's not even talk about how much time goes into closing a transaction. I'll save that for another episode. But the bottom line is, you have to be doing more than 5-6 transactions a year to be making a decent living in this line of work. Suffice it to say it's nothing like the "list a house, get a big check" business model that you might think it is.

Monday Morning Numbers 11/8/10

2010-11-08T07:14:00.000-08:00

I'm not one of those people who typically has a lot of trouble adjusting to time changes. I've seen enough of them at this point to take it in stride. But that said, it feels weird to be writing a Monday Morning Numbers post with the sun already up... Let's take a look at our market stats for this week:

Active Listings: 127

Contingent Listings: 41

Pending Listings: 46 (21.5% of the inventory)

New listings: 6

Months of inventory: 6.1
Click here for the updated price per square foot chart.

Not much different to report here this week. Pending listings dropped a little bit, and we had a little slower week for new listings, but everything is still pretty much where it's been for a few weeks. It'll be interesting to see how things move as we get into the holiday season. I've said before that our traditional cycles have been out the window for a couple of years, but that they might be coming back to some extent. If we are going back to a traditional cycle, I would expect to see slower sales and listing activity over the next couple of months. We'll see how it plays out.

Later this week I'm going to do something that I've toyed with for a while and kick off an occasional series of "Inside The Life of a REALTOR®" posts. I keep trying to come up with something fresh to write at least occasionally - I can only write so many REO updates. When I'm doing two posts a week, it's hard not to keep covering the same old ground all the time. So I hope this is a good addition and you'll find it interesting and entertaining.

Focus on Condos

2010-11-06T13:39:00.000-07:00

This week we're taking a look at activity on condos in our market. When I talk about condos, it's really a much broader category than the technical definition of condominiums (I'll spare you the boring details). Essentially, if it shares a wall with a neighbor and it's not in the Country Club, I call it a condo for our purposes.

We have a pretty high level of these properties on the market at the moment, with 17 active listings. And we're pretty high in distressed properties in this segment, with 10 REO's, 1 short sale and 6 non-distressed listings. In addition we have 6 contingent sales, all short sales.

Sales activity has been fairly steady on these units, with 10 pending sales (3 REO/3 SS/4 non-distressed). Over the past 3 months, we've had 9 sales (4 REO/4 SS/1 non-distressed). The prices appear to be pretty flat over the past several months for most of this segment, but a high inventory of distressed properties is a concern.

When we look at the decline in prices from the peak in our market in late 2005, it would appear that we've lost somewhere in the neighborhood of 50-55% of value. But when we look at condos, it appears to be a much steeper decline. Many of these have lost more in the range of 65-70% in value from the peak. Why is that?

There are a few things at work here. First, it's harder to finance these deals than it used to be. Most lenders have guidelines regarding owner occupancy and HOA delinquencies in a development, and many of our condo associations have some problems in those areas. But what I think is more of a factor is that these were probably more overvalued during the peak than houses in our market. Back in the peak days, houses were selling in the range of $400-425K in the entry level, and even with the ridiculously easy financing in those days it was harder for first time buyers to qualify for a house. So many of the first timers then were buying condos, driving up demand and prices. Now, you can buy a pretty decent house in the $180-200K range, and at those prices, a lot more first time buyers can qualify for a house. Most people (though not all) prefer a house over a condo. Yet another factor is that HOA fees have increased dramatically over the past few years in many complexes, due to a need to build reserve levels and a rise in HOA delinquencies. Some of those HOA's are around the $250-300 per month level, and that's a big chunk of money to factor into the budget.

I've said it before, and I'm sticking to it - I think that condos will be slower to start price recovery than the rest of our market. Until we start to see some financially healthier HOA's and loosened lending guidelines, we'll probably continue to struggle in this segment.

Monday Morning Numbers 11/1/10

2010-11-01T07:43:00.000-07:00

Good grief, it's November already. How does that happen? I suppose that we're about to replace all of the obnoxious campaign commercials with obnoxious Christmas commercials. I love my DVR for letting me skip the bulk of those things... Let's take a look at this week's market stats:

Active Listings: 126

Contingent Listings: 39

Pending Listings: 51 (23.6% of the inventory)

New listings: 10

Months of inventory: 6.2
Click here for the updated price per square foot chart.

No big changes this week in our numbers, although our months of inventory has continued to rise. As we transition some of these pending listings into sold units over the next several weeks, we might see that number drop back down into the 5 month range again, assuming we remain steady with new listing activity.

Later this week I'm going to take a look at our condo market.

Short Sale Fraud

2010-10-30T11:36:00.000-07:00

One of the truly interesting things about working in real estate is watching some of the ways that people come up with to work around (or outside) the edges of legal and ethical behavior. I hear people say that it's a sign of the times, that scams tend to happen when the economy is tight. But really, we had other scams going on when things were hot as well. It's like this crazy game of Whack-a-Mole. Some scam pops up, the authorities figure out how to combat it, and almost instantly, a new scam pops up. The "Mole" of the day is fraud related to short sales.

The big thing to remember about short sale fraud is that what we're typically talking about frauds perpetrated against a federally insured lender. That's a federal felony offense, boys & girls, punishable by 30 years in prison and a $1,000,000 fine. And I don't think you'll be playing tennis with the Enron boys if you go down this road.

Probably the biggest key thing that you as a consumer need to understand is the simple concept that any and all payments for anything must - absolutely must - be paid through escrow and disclosed on the closing statement to all parties. If someone is trying to encourage you to handle something outside of escrow, be afraid. I heard one of our California Association of REALTORS® attorneys put it this way a few weeks ago: When you hear the words "outside escrow" in a sentence, just replace them with the words "in a dark alley". It's pretty much the same thing.

I could write about this at some length, but lucky for me, the California Association of REALTORS® has saved me a lot of typing and you a lot of my typical tortured prose. They've published this article, and if you find yourself in the middle of a short sale transaction and something just doesn't smell right I would encourage you to take a look at it. Or better yet, consult an attorney before getting in too deep. It's a lot of reading, but it's probably better to read about it now than wait until you find it in the prison library...

Monday Morning Numbers 10/25/10

2010-10-25T07:23:00.000-07:00

Seems like I was just on here...

Good morning once again - time again for our weekly check of the pulse of the Lompoc Valley real estate market. Let's see what's happening out there this week:

Active Listings: 124

Contingent Listings: 35

Pending Listings: 58 (26.7% of the inventory)

New listings: 5

Months of inventory: 6.0
Click here for the updated price per square foot chart.

The most noticeable change in these numbers this week was a big drop in the number of new listings. Only 5 new listings came on, and one of those was actually a re-list of something that had been on for a while previously. The other interesting thing that I saw this week was a huge number of price changes - we had 21 price changes last week (13.2% of the inventory). I stopped reporting on that number regularly a long time ago, but I still keep an eye on it. We have to go back a couple of years to see that many price changes in a week. This week saw roughly twice as many price changes as our weekly average for the year in terms of percentage. Interestingly, 9 of them were REO listings and 6 were short sales.

Later this week I'm going to talk about some fraudulent activity that has been happening around the short sale market. Some of it isn't necessarily what the general public might think of as fraud, so it's probably good to get the word out. Make sure you check back in for that one.

Focus On Mesa Oaks & Counrty Club

2010-10-24T17:35:00.001-07:00

I was supposed to get to this earlier this week, but other business got in the way. That happens sometimes. So I'm sitting here with my laptop in front of the TV looking at the Packers/Vikings game, hoping that they can figure out some way for both teams to lose.

This week we're up to an update on activity in our traditional high end neighborhoods, Mesa Oaks and the Country Club. For a little background on these areas, you can go check out my first post on them from last year.

While most of our market in recent months has been generally active and a little low on inventory, these two areas are pretty much running counter to that trend. As of this evening, we have 17 houses on the market in these areas (3 REO's/3 short sales/11 traditional). This is a big change from when I last reported on these areas in May. That's a big swing in the space of about 5 months.

Sales activity has slowed dramatically here. We only have one contingent sale listed there at the moment (a traditional seller) and 3 pending sales (1 REO and 2 traditional). Over the past three months, we've seen a whopping one sale. Are you kidding me? That one was a traditional sale in case you're keeping score.

If there's good news here, it's that the distressed sale activity up there has dropped to a very low level. But that kind of disparity in inventory is a bit concerning for values in the area. Obviously, when we only have one sale in the area there's no way to really establish a price trend. A lot of this will depend on how badly the traditional sellers in the area need to sell their homes. If some of them are truly discretionary, it may be that they'll come off the market rather than sell at fire sale prices.

Next week, I'm going to alert you to some of the frauds that are becoming common in the short sale arena. Make sure you check back in for that. I might even get it done before Sunday evening...

Monday Morning Numbers 10/18/10

2010-10-18T07:01:00.000-07:00

It's going to be a busy Monday, so let's just skip to the chase and get you some numbers:

Active Listings: 128

Contingent Listings: 34

Pending Listings: 58 (26.4% of the inventory)

New listings: 17

Months of inventory: 5.9
Click here for the updated price per square foot chart.

Our inventory edged up a bit this week on the strength of an active week for new listings. Our unlisted REO inventory is down a bit, and with some of the uncertainty surrounding the foreclosure processes, we might see a further decline in the next several weeks. If we continue to see non-distressed listings at the rate we have over the past several months, that probably won't be as large an impact as you might think. I'm still not entirely sure what to make of all this mess, and at some point in the next couple of weeks I hope I can get some good information about it and give you some idea of what to expect. I could sit here and speculate, but you already have plenty of sources for that kind of stuff.

Later this week I'll update activity in the Country Club & Mesa Oaks.

2010 Third Quarter Update

2010-10-14T13:31:00.000-07:00

It's that time again - time for our third quarter market activity extravaganza. Try not to let the excitement overwhelm you... I joke about that, but I'll freely confess to being a total geek for this kind of stuff. So I hope that you at least find it informative.

The last quarter was a little surprising to me in a couple of aspects. Overall, we saw a lower level of sales activity, and what would appear on the surface to be a trend toward lower prices. I don't necessarily think that the overall numbers here are telling the whole story, though. We'll get into that shortly.

As I have for the past few quarters, I'm breaking this down into two segments - statistics that come from combined data of the two MLS services that I use - my primary Lompoc Valley Association of Realtors (LVAOR) MLS and the Central Coast MLS - make up the first part, and then I move to data derived exclusively from LVAOR.

Looking at the combined numbers, we had 102 total sales of single family residential units (houses and condos) in our market last quarter. That represents a decrease of about 12% from the same quarter in 2009, and a decrease of about 23% from the red-hot second quarter. We don't usually look at volume from one quarter to the next because sales volume tends to be seasonal. But in the past couple of years, the seasonal norms have gone right out the window in our market. And it's worth noting the large drop in activity after the expiration of the home buyer tax credits.

Prices dipped in the third quarter after seeing a bit of a rally in the second quarter, as you'll see from the updated Price Per Square Foot chart. This is one of the data points that I'm a little hesitant to take on its face this time around. From being on the inside of this market, I can tell you that the idea that we dropped 6.7% of our value last quarter just doesn't ring true. When I look at individual areas, I see some of them that actually appear to be appreciating in value slightly. I think that there are a couple of factors affecting the overall number. First, when we have fewer total sold properties, it's easier for things to get skewed one way or another. Even with a high volume quarter like we had in the second quarter this year, we're not exactly turning over huge numbers. So there's some room for error, both high and low, with that number. Second, I think that what we saw last quarter was also in part due to the types of properties that were selling. When I break it out and look at it property by property, it appears that we had a few more fixers sold last month than we had in the second quarter. And it appears that we didn't sell as many of our nicer, newer properties this quarter. Bottom line, I'm not seeing enough here to make me think that we're in a down cycle again on price.

Looking at the distressed property numbers, it looks like the numbers have shifted a little bit, but not necessarily in the way that I would have anticipated. REO's accounted for 44.1% of our third quarter sales, up a bit from 34.8% in the previous quarter. Short sales dropped off to 18.6%, down from 23.5% in the second quarter. That leaves non-distressed sales as 37.3% of our market, down slightly from 41.7% in the second quarter. I'm a little bit surprised that we aren't seeing more short sales at this point, and I'm kind of at a loss to explain why that is. It might be that because we've been seeing more non-distressed listings that buyers are opting for those listings first. But sort sale listings haven't exactly exploded either, accounting for only 23.6% of new listings that came on the market in the third quarter, down slightly from 25.8% in the second quarter (that's an LVAOR only number if you're keeping score). I keep expecting that because we have so many homeowners in negative equity positions, and banks trying a little harder to cooperate with - and even encourage - short sales, that we'll see a noticeable increase in these listings. It seems to be slow coming, but I'm still convinced that we are going to see a short sale dominated market in the not-too-distant future.

Now we're into the LVAOR-only part of the program. When I look at how properties are being financed, things shifted a little bit, but not significantly. 23.6% of our sales were financed with conventional loans, 38.2% with FHA loans, 19.1% VA loans, and 19.1% cash. That cash number continues to amaze me. We have investors all over this market, which should probably tell you something about values.

Market times edged up slightly to a median of 24 days in the third quarter, and escrow periods edged up a little bit as well to 46 days. Given the drop in sales volume, I thought that we'd see a little more of an uptick in market times. Not so much, it turns out.

Another statistic that doesn't quite jive with the decline in overall prices is the percentage of units selling at or above the asking price. We saw an increase in those, up to 66.3% in the third quarter. If we were truly seeing a downturn in prices, I would fully expect to see that drop. But we still have a competitive market, and while it doesn't feel quite as frenzied as it was earlier this year, we still apparently have some competition among buyers.

Looking ahead, I expect that we'll continue to bounce around pretty close to our current price level for a while longer. Price recovery is likely to be slow unless we get a significant spike in high-pay employment in our area. But on the flip side, I don't think we have much more room to go down in price, and with interest rates being at the lowest level since 1951 (holy moly!) I can't imagine that we aren't going to see some increased activity. In fact, we may already be seeing some signs that our volume will improve. Our pending listings have edged up in recent weeks, which should translate to a bit of an increase in sales volume in the next quarter. We'll see how that pans out in about three months.

Monday Morning Numbers 10/11/10

2010-10-11T07:34:00.000-07:00

I'm back in town after a few days down in Anaheim at the California Association of Realtors business meetings. It's always weird for me to be on the road - I'm definitely a home-body. But the meetings were interesting, and I have a good blog topic for a couple of weeks from now that came out of a recurring theme from them. Let's take a look at this week's numbers:

Active Listings: 121

Contingent Listings: 36

Pending Listings: 59 (27.3% of the inventory)

New listings: 11

Months of inventory: 5.5
Click here for the updated price per square foot chart.

It doesn't appear that much changed while I was out of town. We're still seeing a very slight trend to an increased level of pending sales. The big news that hit last week was that Bank of America is putting the brakes on foreclosures in all 50 states while they review their processes. That could be a significant short term hit on inventory in a few months - we've had a lot of their properties on the market in this cycle. It'll be interesting to watch two things here: Will any of the other major lenders follow suit? And what happens when they resume foreclosures? Stay tuned.

Later this week I'll be doing my wrap-up of the third quarter. You know you don't want to miss that.

Monday Morning Numbers 10/4/10

2010-10-04T06:46:00.000-07:00

Good morning again! I'm up to my ears in stuff to do before I can get out of town for some association business tomorrow. Getaway days are always a mad scramble. The good - well, more like mitigating - news is that Diane isn't traveling with me this time, so someone is here to tend to the business on the home front. Let's take a look at the numbers for this week:

Active Listings: 122

Contingent Listings: 33

Pending Listings: 56 (26.5% of the inventory)

New listings: 10

Months of inventory: 5.5
Click here for the updated price per square foot chart.

This looks like another week of largely unchanged numbers, as we seem to be in another little plateau of inventory and activity for a little while.

As a follow-on to the REO post I did a couple of weeks ago: I had mentioned that there had been a recent announcement that Fannie Mae was going to put pressure on loan servicers to process foreclosures more promptly. Well, last week we started to see reports that Chase & GMAC are actually imposing a moratorium on foreclosures for a period while they sort out some legal issues. That might dampen inventory growth a bit in coming months. I give up on trying to guess what's going to happen next.

Unless something real interesting happens, I probably won't have a post later this week. Try not to go into withdrawal.

Focus On North Lompoc

2010-09-29T17:14:00.000-07:00

This week we're back to a neighborhood focus, with a look at what's been happening on the north side of town. For an explanation of the geography of the area and types of homes we are covering here, take a look at my first post on the area from last year.

We're fairly light on inventory in the area at the moment, with 10 active listings (1 REO/6 short sales/3 traditional). That's down a bit from the last time I reported on the area back in May despite a trend to higher inventory levels in our overall market. We also have 7 contingent sales in the area (2 REO/8 SS).

Sales activity has slowed slightly since the last update, but it's still pretty good. We have 9 pending units in the area this afternoon (3 REO/2 SS/4 trad), and we've had 13 sales in the past three months (5 REO/2 SS/6 trad). The activity that we're seeing here seems to be pointing towards a lower level of distressed sales.

This is probably one of the hardest areas to really get your arms around in terms of price trends. Because we have a pretty broad range of ages and sizes of homes, we usually don't have enough of any one type of home to really peg a trend. The fact that we have a lower level of distressed sales in the area is probably helping values in the area, but there just aren't enough sales to say for sure.

Next week I'll have my regular Monday Morning Numbers post, but I probably won't have a mid-week update on anything. I'm off to Anaheim for the C.A.R. fall meetings for most of the week. Big fun.

Monday Morning Numbers 9/27/10

2010-09-27T07:21:00.000-07:00

Finally, we're getting some summer! We just had to wait until the calendar told us that autumn had officially started. Go figure. Let's take a look at this week's market stats:

Active Listings: 121

Contingent Listings: 36

Pending Listings: 54 (25.6% of the inventory)

New listings: 8

Months of inventory: 5.5
Click here for the updated price per square foot chart.

No significant changes to the numbers this week. We seem to have settled in to a slower period for new listings. Maybe the traditional seasonal patterns that we used to see are beginning to come back. It used to be that we'd see a lot of activity in the summer, and things would slow down after the school year started. In the past couple of years, that trend has fallen by the wayside with the influence of REO listings. We're still probably a long way from "normal" (whatever that is).

Later this week I'll take a look at activity in the north end of town. And tonight at 5:30, I go offline because the Bears are playing the Packers. You can call me if you like - you'll get my voice mail. Bear down, baby.

Focus on REO Activity

2010-09-24T17:06:00.000-07:00

As advertised earlier in the week it's time to update you on REO activity in our market. It's been an interesting few months to watch what's happening out there on the foreclosure front, and we are definitely seeing a change in some of our numbers.

REO listings currently account for 20% of our active inventory. That's pretty close to the same number that it's been when I've looked at that stat for the past couple of years. What's been changing is the percentage of pending and sold units. Currently 35.2% of our pending units are REO's, and 35.6% of the sales over the past three months are REO listings. That pending number seems to move a lot one way or the other - when I last covered REO's in June, we were as low as 23%. But there were points in 2009 when it was in the 70% range.

REO listings have dropped pretty dramatically in recent months. The drop from the first quarter to the second was about as large and abrupt a drop as I've seen in any meaningful statistic, from 60.4% ( a level that had been pretty consistent for several quarters) down to 34.8%. What happened?

Well, foreclosure activity dropped a bit a while back and has kind of bounced along a slightly lower level than last year, as you'll see from this chart. We have a couple of spikes here and there, but for the most part we haven't seen as many properties taken back by the banks in foreclosure as we saw last year. We've been bouncing around 60 or so REO properties that have gone back to the banks but haven't yet listed, and that has been a very stable number since I started tracking it early last year.

When I look at the percentages of new listings that were REO properties over the past couple of years, it definitely appears that we have a downward trend there as well. For most of last year, the percentage of new listings each month that were bank owned were in the 40-50% range. Over the past few months, that's dropped into the 20-30% range, with a small spike last month of 36.2%. That goes a long way to explaining why REO sales have dropped off - there just aren't as many of them to sell.

Is this a trend? It sure looks that way. We might see a little bit of an uptick in foreclosure activity in the coming months with Fannie Mae putting more pressure on loan servicers to act on borrowers in default. But that's probably not going to be enough to drive a big spike in activity. If the current trends hold as I expect, we're going to see a slowly diminishing presence of REO properties in our market, and short sales are going to become much more common.

Monday Morning Numbers 9/20/10

2010-09-20T07:54:00.000-07:00

Good morning again, and BEAR DOWN CHICAGO BEARS! Sorry about that, I'm just a little over-exuberant about that tough road win. And now it's officially Packer Week... Let's take a look at this week's market stats:

Active Listings: 124

Contingent Listings: 38

Pending Listings: 54 (25.0% of the inventory)

New listings: 6

Months of inventory: 5.9
Click here for the updated price per square foot chart.

We had a bit of a decline in the raw number of active listings this week, mostly due to a notable spike in pending sales. Another tepid week for new listings coming on the market was also a factor. Our months of inventory edged up a little more this week, but that has more to do with a slowdown in sales activity than anything. If that little spike in pending sales turns into anything resembling a trend, we'll probably start to see that months of inventory number edge back down in a couple of months. That might also happen if we continue to see a trend of lower numbers of new listings.

Later this week I'm going to update REO activity in our market. You know you don't want to miss that.

Focus On Central Lompoc

2010-09-16T14:23:00.000-07:00

We're back to covering an area this week, moving up the map to the central part of Lompoc. For some background on the area and a description of the properties here, you can check out my first post on the area from last year.

Despite the trend to a somewhat higher level of inventory market-wide in recent months, it appears that we are in a little bit of a decreased inventory level here since the last time I reported on the area back in May. We have 18 active listings on the market this afternoon (5 REO/7 Short Sale/6 traditional).

Sales activity has been fairly solid with 8 contingent sales (2 REO/6 SS) and 14 pending sales (8 REO/2 SS/4 Trad). We've had 29 sold units in the past three months (12 REO/4 SS/13 Trad). Looking at all of these numbers, it appears that we're seeing a little bit higher percentage of distressed sales - especially REO's - than the market as a whole.

The good news here is that a higher level of distressed sale activity doesn't appear to be hurting values too badly. This is probably our highest volume area that I cover, so I can put a little more faith in the numbers than for most of our other areas. When I filter out everything here except for the 1960ish tract homes, the prices over the past three months appear to be up a little from the previous three month period. The median has edged up by about 2% and the price per square foot is up about 5%. These are encouraging numbers.

Come back next week for an update on overall REO activity in our market. Always good times.

Is it really as bad as they say?

2010-09-15T10:12:00.000-07:00

Just a quick bonus blog post this week (I'm still going to hit central Lompoc activity later in the week).

I've been seeing some news reports recently talking about how horrible the housing market is, and how July was one of the worst months in history for home sales. If I believed half the stuff I saw in the news, I'd probably have slit my wrists a long, long time ago...

Two points to make here: First, the news media is in the business of selling advertising, and bad news draws more viewers than good news. What that says about us as a society isn't exactly encouraging, but that's just how it is. So they tend to spin things negatively. What are you gonna do?

The second point is that real estate is all local. That's one of the driving reasons why I write this blog. Even though the national numbers might very well have been bad for July, on a local level we are right on par with last July. We aren't anywhere near the level we were at in the peak years, but it's not as bad as, say, 2007. And our prices still remain stable. My advice? Don't believe everything you see on TV.

Monday Morning Numbers 9/13/10

2010-09-13T07:14:00.000-07:00

Dang, it's good to have football back! Even if the Bears did look just gawd-awful winning a game that they tried really hard to throw away. But I'd rather look bad and win than look good and lose. But you didn't come here for an NFL wrap-up, did you? Let's look at our market numbers this morning:

Active Listings: 132

Contingent Listings: 38

Pending Listings: 42 (19.8% of the inventory)

New listings: 6

Months of inventory: 5.7
Click here for the updated price per square foot chart.

Theses are some pretty similar looking numbers to what we saw last week. The new listings were down a bit, but I think that the holiday week might have had something to do with that. We are coming into a time of the year when we traditionally see activity slow down a bit, but things have been weird enough in this distressed property market that our traditional cycles are pretty much out the window.

Later this week I'll have an update on central Lompoc.

Foreclosure Avoidance Seminar

2010-09-11T15:27:00.000-07:00

You may recall that a few weeks ago we had our Foreclosure Avoidance Seminar. It was the first time that we’d done one of these events, and we really didn’t know what to expect in terms of attendance and response from the public. I had this sick fear that we were going to be talking to an empty room for a couple of sessions, but it turns out that we had a very good attendance and response. I thought that I’d use this space to share some of the highlights of some of the information that we covered for those who were unable to attend.

The big key points that we wanted to make to our attendees are a couple that we make to every person who contacts us with mortgage problems: You aren’t alone. And you have options. Unfortunately, far too many people who start down this road never seek assistance – 7 in 10 foreclosures happen without any visible intervention.

If you look at the national trends, the numbers are staggering. According to the Mortgage Bankers Association (MBA), around 1 in 6 mortgages in the U.S. are delinquent, and 4.6% of loans are in some stage of the foreclosure process. The local numbers are pretty grim as well, as you know if you’ve been reading this blog for any period of time. I don’t have the MBA numbers for our area but I can tell you that about 40% of homes in our market have negative equity, and we’ve seen around 950 homes lost to foreclosure since the beginning of 2007. So you see what I mean by “you aren’t alone”.

The consequences of foreclosure can be pretty severe. It’s one of the biggest hits you can take to your credit, and it’s the only one that can affect your ability to borrow even after it has rolled off your report. It can also have a negative impact on your employment, both current and future, and it can cause problems for borrowers that have security clearances. There are also potentially some significant tax issues that could arise, and in some cases the lenders could come after a homeowner after the fact for a deficiency judgment. That’s effectively the difference between the total amount owed on the loan (plus late fees, penalties, and legal expenses) and the amount that the lender is eventually able to net after the foreclosure. Bottom line – you don’t want to go down this road if you have other options.

So let’s look at the “you have options” part. We went over a whole series of options for homeowners in default. There are several ways to avoid foreclosure, and it all depends on the situation. In a nutshell here they are:

Reinstatement – if you have the means, you can pay the past due amount and get everything back where it was.
Forbearance – set up a payment plan with your lender to pay back the past due amount in addition to your regular monthly mortgage.
Sell the property – If you have equity, you can sell it straight out to a third party, pay off the mortgage and walk away with cash in your pocket.
Rent the property – This doesn’t work out often, but if you can rent the property for the amount of the monthly mortgage, it might be a solution.
Deed-in-lieu – Cut to the chase and get it over with. Make arrangements with the bank to take it back without going through the whole process. Some banks still report this as a foreclosure, however, so the consequences could be about the same.

And then we have the two options that we spent the most amount of time covering: Refinance/ loan modification and short sales. We had Patrick Chandler from Bank of America Home Loans to talk about the loan side of it, and he covered some programs that are available to struggling homeowners. He covered the options that are available through some new government programs, and rather than go over them here, I’ll send you straight to the source – www.makinghomeaffordable.gov.

Then I talked about short sales. If you’ve been reading this blog for any amount of time, you know something about short sales. But for the uninitiated, a short sale happens when a seller has to sell a house, but won’t be able to pay off the total debt on the house with the proceeds. It’s a process that can be relatively quick, or long and drawn out. And the key component in it is patience. I pointed out to the attendees that one of the truisms in our profession is that we don’t list houses. We list sellers. And that’s especially true in a short sale. If the homeowner isn’t completely on board and willing to cooperate with the agents and banks throughout the process, we’re likely to have a less than successful outcome.

I also covered the new HAFA short sale program, which is also detailed on the link above. In brief, it’s a new program that came out in April that can help homeowners get through the short sale process in a more streamlined and standardized process. It also has some good incentives for both the homeowner and lenders. The big incentives for the homeowner are a $3000 relocation assistance payment and a release of the debt – the lenders have to agree to waive the right to a deficiency judgment. That last part is HUGE in some cases.

We had some very good Q&A time at the end, and in both sessions, we had questions from several people who had been attempting loan modifications. What we weren’t hearing were a lot of success stories. We weren’t surprised to hear that there is a lot of frustration out there. You need to remember, this is a relatively new endeavor for the lending industry. They simply weren’t geared up for this and they’ve been scrambling to get processes worked out and thousands of new employees hired both for modification and short sale departments, all while taking huge losses. So yes, things have been bumpy.

The best advice we were able to give them is to educate themselves on the programs, and be persistent. What I told them - and what I’m telling you - is that if you are going through either a loan modification or a short sale, you have to be your own best advocate. We rattle cages for our clients as much as we can, but you need to be right there making noise as well. It’s a participation sport.

Monday Morning Numbers 9/6/10

2010-09-06T10:07:00.000-07:00

Good morning, happy Labor Day! And another summer goes flying right on by... I'm mostly taking today off, but I'd hate to let a week go by without giving you some numbers. So here they are:

Active Listings: 130

Contingent Listings: 39

Pending Listings: 41 (19.5% of the inventory)

New listings: 12

Months of inventory: 5.4
Click here for the updated price per square foot chart.

Raw inventory edged up a bit more this week, but our pending listings dropped with a handful of sales this past week, keeping the months of inventory down to the same level as last week. This is the lowest percentage of pending listings that we've seen overall since March 2009.

Later this week I'll have a recap of the Foreclosure Avoidance Seminar from a few weeks ago.

Look Ma, I'm on the TV again!

2010-09-03T15:50:00.000-07:00

A couple of weeks ago I had a call from Dulcie Sinn asking if I would come to the TAP TV studio to appear on her weekly show, Dr. Sinn's Front Porch Politics. For those of you who don't know who Dulcie is, she's a local businesswoman who is running for city council this year. She has a new blog up at dulciesinn.com. I'm not the most political guy in the world, but you know how hard it is for a Realtor to turn down an opportunity to sit and talk about real estate. I had only met Dulcie briefly before, so it was a good opportunity to sit and chat with her. I like Dulcie, she has a lot of good energy and enthusiasm. I hope that if she's successful in her campaign that she can hang onto that and use it to spark some positive changes at city hall.

We had a good conversation about local real estate, and I don't think that we had time to get to some of the questions that she had. Hey, that'll happen when you get me started. It's on the air starting today, on Comcast Channel 24. Here's the schedule:

Fri: 4:00 PM
Sat: 2:00 PM
Sun: 11:30 AM
Mon: 7:00 PM
Tue: 11:00 AM

Check it out if you can. I'm not a Comcast subscriber, so I may not get a chance to see it. Check in with me if you get a chance to see it and let me know how you thought it went.

Focus On The Southside

2010-09-01T17:03:00.001-07:00

This week we're back around to the Southside in our neighborhood/area updates. For an overview of the neighborhood and the types of properties we are covering, check out my first post on it from way back last year. After last week's short sale post, I think we could all use something a little more upbeat, and there's some good news to share from this part of town.

And the good news is primarily that distressed property sales appear to be declining here in a big way. We have 16 active listings this afternoon, and only 6 are distressed sales (2 REO and 4 short sales). There are only two contingent sales at the moment (1 REO/1 SS).

The decline in distressed listings also carries over to sales activity. We have 7 pending sales in the area today (2 REO/2 SS), and we've had 12 sold units in the past three months (2 REO/2 SS). I've been talking a lot in recent months about how many traditional sellers we've had coming back into the market, and they are all over the Southside these days.

There's even more good news: It appears that home values are beginning to edge back up here. When I reported on this area back in May, I reported that it looked like we'd been seeing some signs of appreciation here. And when I compare the last three months here to the previously three month period, that trend appears to be holding. We've seen about an 8% increase in median prices and a very slight increase in price per square foot. Again, when we're working with volume as low as this, it's hard to really hang your hat on that data. But it looks promising.

Next week I'm going to do a recap of some of the data from our Foreclosure Avoidance Seminar that we held a couple of weeks ago. It was well received, so we wanted to try to get some of the information out to more people. So come back for that, and please forward a link to anyone who might benefit from it as well.

Monday Morning Numbers 8/30/10

2010-08-30T07:42:00.000-07:00

Good morning again, and welcome back to another exciting edition of Monday Morning Numbers! Let's see what's happening in the Lompoc Valley real estate market this week:

Active Listings: 125

Contingent Listings: 42

Pending Listings: 47 (22.0% of the inventory)

New listings: 14

Months of inventory: 5.4
Click here for the updated price per square foot chart.

These are some pretty stable numbers from last week, with a little bit of an increase in contingent and pending sales. Remember a couple of weeks ago I told you that I expected to see a small influx of REO listings soon? We got six of them this week, and 10 of the 14 new listings were distressed properties. We still have a small backlog of REO listings that have yet to hit the market, so it wouldn't surprise me to see them continue to trickle in.

Later this week I'll be taking a look at the Southside.

Focus On Short Sales

2010-08-25T15:26:00.000-07:00

Like I said on Monday, putting on that Foreclosure Avoidance Seminar last week put me in a short sale state of mind, so it seems only natural that I'd take a look at the short sale activity in our market this week. Well, that and the fact that I was way overdue to give you an update on this segment anyway. January? Really? How did I do that?

No surprise, short sales are continuing to be a big part of our market. As I had mentioned in my Focus On Equity post several weeks ago, we're very much in a negative equity market right now, with somewhere near 40% of the residential properties in the Lompoc Valley having more debt than value. So if someone has to sell one of those, well, you know the drill.

As of this afternoon, short sales account for 28.2% of our active inventory, 74.4% of our contingent listings, 27.7% of our pending sales, and 17.7% of our sold units over the past three months. That percentage on the sold units is down a bit, but based on the pending numbers, I expect it to rebound by the end of the quarter. At some point in the next few quarters, I fully expect short sales to be the largest segment of our sales.

Our real estate community had a presentation today from a title company on a couple of topics, and one of the things that the presenter touched on towards the end was foreclosures and short sales. Shocking to think that when you get a roomful of people in our industry that we'd talk about these things, I know, but there it was. Someone asked her how long we were going to be in this market, and she hemmed and hawed a bit and said maybe two years. Well if you know me, you know I don't shut up and listen all the time. So I had to present a different view - I said that I thought we were in a distressed property market for about 5 years.

When I thought more about that later this afternoon, I realized that I was probably wrong. It's probably longer. Let's run the numbers, and I'll tell you why:

Using the number that I used for that equity post, we have 4410 homes in our market (41%) with negative equity. Like I said at the time, based on the fact that they use an automated valuation model to estimate those numbers, I think that's pretty conservative. But let's be optimistic and assume that's pretty accurate. What's it going to take to get us out of that? Two things, essentially - price appreciation and property transfers. Price growth will eventually bring some of the homes that are closer to the edge back into positive equity over a period of time. And we wipe out negative equity when we sell one of those homes.

In the first half of this year, we sold 156 distressed properties in our market. If we hold that pace, we'll sell 312 for the year, which would eat up about 7% of that total number of homes in negative equity. Let's make an optimistic guess here that we'll sell more of those. Let's say 8% for the next five years. Now let's make another optimistic guess that we'll roll off another 5% to price appreciation, just for the sake of having a number. I don't know if that will happen, but let's just plug it in there. We'd be knocking 13% a year off our negative equity total. What does that look like?

2010 - 4410 total homes with negative equity
2011 - 3837
2012 - 3338
2013 - 2904
2014 - 2526
2015 - 2198

That would cut the total number of homes with negative equity down to around 19% in 5 years. That's a big improvement, but it's still a lot of homeowners upside down. Now, it's possible that we'll see a larger and larger percentage of sales in this segment over the next couple of years, so maybe the transfers will do more to get us further along. Maybe we can get it down to 12-15% in 5 years. If banks started doing meaningful loan modifications where they wrote down principal, that would also help. Don't hold your breath for that one... And maybe if we get a big boon to employment on a local level we can do a little better. But the flip side is, if we dip further into another recession and we lose a lot more jobs locally - well, let's just not go there.

Yes, I'm being Dr. Doom here. But now let me tell you the good news. Short sales are improving. Banks continue to get better at them and are training huge numbers of people to process them. Our industry is getting better at the process. The last time I reported on these, we had about a 32% success rate on short sales - meaning that 32% of the resolved short sale listings over the previous year got sold. In the space of about 7 months, we've improved to about 47%. That's significant progress, and I think we'll continue to see improvement in coming months.

It all comes down to numbers. We're looking at some pretty daunting statistics here. All we can do is deal with this problem and keep trying to fill up this gaping hole of equity. Grab a shovel and start in.

Monday Morning Numbers 8/23/10

2010-08-23T07:22:00.000-07:00

Good morning. Crazy week last week for us between taking on some new listings and having that foreclosure avoidance seminar, so I didn't get around to a second post. I'll try not to let that happen this week. That seminar, by the way, was very well attended. We got some good feedback, and we've come up with a few ways to make it even better next time. We'll probably do one again in a few months. Let's take a look at this week's numbers:

Active Listings: 127

Contingent Listings: 37

Pending Listings: 45 (21.5% of the inventory)

New listings: 16

Months of inventory: 5.2
Click here for the updated price per square foot chart.

We had another very active week for new listings, with 9 of the 16 being distressed sales. We're still seeing an influx of non-distressed properties coming on the market. Inventory continued to climb again this week, and sales activity remains pretty stable.

Since I spent so much time talking to people last week about short sales, I figured that it's just natural that I'd cover short sale activity later this week. I have a couple of interesting numbers to share, so make sure you come back for it.

Monday Morning Numbers 8/16/10

2010-08-16T07:31:00.000-07:00

Good morning! It's time once again to take the temperature of the Lompoc real estate market. If I can just get the market to hold this thermometer under its tongue for a few minutes...

Active Listings: 120

Contingent Listings: 38

Pending Listings: 45 (22.2% of the inventory)

New listings: 18

Months of inventory: 5.2
Click here for the updated price per square foot chart.

We had what might have been the highest activity week we've seen in our market all year. Lots and lots of "hotsheet" entries every day. Of the 18 new listings, 10 were distressed properties this week. Despite a lot of churn, the numbers don't look much different than they did last week. Inventory is still slowly edging up week by week, and sales activity is slower than it was in the first half of the year, but still pretty solid.

I've been remiss in mentioning it here, but we are having a Foreclosure Avoidance Seminar this week at our office. There are two sessions from which to choose - Wednesday at 7:00 PM or Saturday at 10:00 AM. We'll be giving an overview of the foreclosure process and some solutions to help prevent that sad fate, to include short sales. And we'll have Patrick Chandler from Bank of America Home Loans to talk about some of the loan modification and refinance options that might be available. If you know anybody who has been struggling with their mortgage payments - and I think almost all of us know somebody - please let them know about this event. If anybody has any questions about it, call me at 757-3762.

The Flip Is Back

2010-08-14T18:08:00.000-07:00

One of the things that has come back into our stabilized market is the investor who picks up a home on the cheap and turns it around for profit. The common term that we use is "flipping". It never really went away - even in 2006 & 2007 when prices felt like they were in free fall, we had a few brave souls looking for and finding the occasional opportunity to turn a profit. Of course, it's a little dicier maneuver in that kind of environment.

Now that prices have flattened out -and maybe even started to inch back up - we have a few more players in this game. In our market we have three or four pretty active investors buying and flipping properties at the moment, and a few more doing one here and there. We've spoken to a couple of potential investors who have some interest in these opportunities as well. We even considered doing it last year ourselves on a small basis, and probably would have done so if we hadn't found the long term investment that was our ultimate goal first.

The basics are pretty simple. Buy low, sell high. In most cases, these investors are adding some value and taking a profit. I've heard a few people grouse about the practice, but if you ask me it's as American as political sex scandals and apple pie. Where would we be without risk takers?

There are a couple of different ways that people are going about this. First, we have some investors who pick up listed properties at great prices, usually but not always REO properties. These are usually very rough and need some rehab. So the investor gets the needed work done in a reasonably inexpensive fashion, and then puts it back on the market as quickly as possible. This is usually the less risky of the two methods, because you can do a little bit of investigation during escrow and you're getting title insurance.

The riskier method is to pick up a property at a trustee's sale at the courthouse steps. I talked about this a little bit when I wrote about our investment adventure last year. Bottom line, it's cash (well, cashier's check) on the barrel head. No inspections, no title insurance, no contingencies, no loans, no escrow period. The hammer falls and it's yours. If it has a bad foundation? It's yours to fix. Any back property taxes or liens that weren't wiped out by the foreclosure? Yours. You get the picture. So the people who are doing this with any regularity are pros - they do their legwork on properties up front as much as they possibly can. And even then, they get the occasional surprise. The upside, however, is that these are usually picked up below where they would be available if listed, and there usually isn't a lot of competition. Sometimes they need to put some more money into the house, and sometimes they get off without much rehab expense at all.

From a buyer's perspective, it's really not much different than buying any other property, except that in some cases it can be problematic to get an FHA loan on one. A few years ago, FHA put in a rule that said that they wouldn't insure loans on properties that had been owned for less than 90 days. There had been some fraud back when the market was red hot (but then, when isn't there some fraud?). Early this year, they changed those rules to allow this practice, but they still had some restrictions. And many lenders weren't willing to go back to writing FHA loans on flipped properties, although there are some who do.

I did a quick search through our MLS this afternoon, and at a glance I could identify 5 active listings and 7 pending sales that I know are flips, and 11 sales since the beginning of the year. Most of these have been picked up on the courthouse steps. So far this year, we've had 25 houses in the Lompoc Valley go to investors at trustees' sales, and 8 just in July. It would appear that this trend is going to grow. It's not likely to become a huge segment of our market, but unless we start to see a downturn, we'll have these opportunities available.

Monday Morning Numbers 8/9/10

2010-08-09T06:57:00.000-07:00

Oh, I like the synchronicity of today's date. 8/9/10. That must mean everything is going to line up perfectly. Uh-huh... Let's take a look at this week's numbers, fresh out of the oven and piping hot:

Active Listings: 118

Contingent Listings: 37

Pending Listings: 43 (21.3% of the inventory)

New listings: 11

Months of inventory: 5.0
Click here for the updated price per square foot chart.

Hey, wait a minute, those look suspiciously like last week's numbers. It's almost like somebody just pulled them off the shelf, popped them in the oven for a few minutes to warm them up, and tried to pass them off as fresh. But as it turns out, we really haven't seen much change this week once again. I'm still waiting to see if a small influx of REO listings will come on sometime soon. But for right now, things continue to look stable.

Later this week I'm going to examine the resurgence of the "flip" in our market. Should be interesting, check back in for that one.

Focus On Mission Hills

2010-08-07T11:36:00.000-07:00

It's been a crazy week again, so here I am getting around to my focus post on Saturday. Hey, that happens sometimes. And I know that everyone has been waiting with eager anticipation to see what's happening in Mission Hills all week, so let's get to it.

A quick refresher on the area: We're looking at a pretty homogeneous area here in terms of age and style of houses. The whole development was built as workforce housing in the late 50's/early 60's boom period when Vandenberg was ramping up. These are pretty much entry level homes, with the bonus for some buyers of being in some of our more sought-after school districts. Some of the houses in this area are a little bedraggled, but there are also some very nicely maintained homes as well. It's a mixed bag.

Once again, the activity in this area is light enough that I'm incorporating some data from Central Coast MLS in with my usual Lompoc MLS data. For various reasons, this neighborhood seems to attract a bigger percentage of out of town agents than most of our areas.

We have 4 active listings in the area at the moment, 2 short sales and 2 REO's. That's pretty light, but it's up a bit from the last time I reported on the area. Contract activity has picked up a bit, with 4 contingent sales in the area (all short sales) and two pending units (interestingly, both traditional sellers).

We've only had two sales in the area in the past three months, but that was mostly due to a lack of inventory there earlier this year. One of the sales was a short sale, which sold for a pretty good price. The other was an REO, which went a bit below where I would have expected it to sell. It's hard to say what the price trend is in this little micro-market, but I suspect that it's probably tracking with the rest of the market - flat or very slightly appreciating.

Next week I'm going to try to dig into a trend that we've started to see in our market and other areas - the resurgence of property flipping.

Monday Morning Numbers 8/2/10

2010-08-02T07:20:00.000-07:00

Good morning again! We had the dog show in our back yard this weekend, and aside from some more traffic around the neighborhood, you'd never know there was anything going on. I would have figured that if you bring in that many dogs, one of them would start barking, then the rest would start, and it would be a non-stop symphony. But nope, good doggies. Let's take a look at our market stats this week:

Active Listings: 118

Contingent Listings: 36

Pending Listings: 41 (21.0% of the inventory)

New listings: 10

Months of inventory: 4.9
Click here for the updated price per square foot chart.

Nothing notable changed this week for the second or third week in a row. We seem to be on another one of those plateaus. I was looking at my unlisted REO inventory over the weekend, and that has climbed up to 68 units. What I've seen in the past when we've gotten that high is a 2-3 week period where we get a small increase in REO listings. So I'll be looking for that in the near future.

Come back later this week for an update on Mission Hills activity.

A Buyer's Guide to Short Sales

2010-07-29T19:56:00.001-07:00

If you've been even glancing in the general direction of this blog over the past year and a half, you know that I'm of the opinion that short sales are going to take a growing share of our market, and they're here for at least a few years. For instance, last month I had told you that something like 40% of all of the houses and condos in the Lompoc Valley have more debt than value.

Short sales have gained in the percentage of sold units in our market, and it wouldn't surprise me at some point over the next year to see them as the biggest share, more than REO's or non-distressed sales. So it's probably becoming more critical than ever that not only sellers and their agents get clued into the short sale process - we need buyers to understand this side of the market as well. So pull up a chair, kids. Uncle Dennis has some advice to share.

Tip #1 - Know Thyself

You need to know a couple of things about yourself before you make an offer on a short sale. Probably the most important two things that you need to clue in on are how patient you are, and how much you want to own that house. Because in almost all of these sales, your patience will be tested at some point. Probably at multiple points. If you know going in that patience isn't among your virtues, you might want to stick to other types of sales - and you might want to get after it now, before short sales make up a bigger share of what's available. Or if your interest in the house is lukewarm and it feels like you're settling for less than you really wanted, do yourself a favor: move along to the next target.

Tip #2 - Understand the process

Know as much as possible about the situation as you can going in. There are so many variables in this process that it's almost impossible to know how the deal is going to progress. For instance, does the seller have one loan or two (or more) against the property? Have the sellers and/or their agent opened up a line of communication with their lenders? Have they already completed their short sale package? Has it had an accepted offer previously? How active is the listing agent with follow-up? Your agent should be explaining as much as possible about the process to you. If they aren't, ask a lot of questions. Explaining the layout of this maze is one of the things that we're supposed to do for you.

Tip #3 - Don't expect to "steal" a house

There's this fantasy out there among buyers that they can take advantage of a distressed sale market and grab a short sale for 20% less than market value. Uh-uh. Don't get me wrong here. It's possible to get a very good deal on a short sale. But the banks are going to do some level of due diligence, and they are going to be getting an independent third party opinion of the value of the home, either from an agent uninvolved in the transaction or from a licensed appraiser. They are getting to be a little more reasonable, but if you're looking to score a $230K house for $180K, you probably aren't going to find it in a short sale. Stick to an REO that needs a little cosmetic work.

Tip #4 - Negotiate everything you want up front

The standard contract that we use in our transactions has an investigation period built into it that allows the buyer to do inspections, review disclosures, look at HOA documents where applicable, that sort of thing. Most of the time, that period starts after the lien holder has issued approval for the deal. In fact, you'll want to make sure that the short sale addendum to the contract that we use specifies that. And you have a contractual right to re-open negotiations with a repair request.

But here's the thing: If you find something that bothers you in that investigation period, don't count on getting repairs done. You can still do a repair request. But the seller probably has no money to do repairs. And the lien holder has based approval of the deal on a net proceeds estimate that didn't include those repairs. So if you do a repair request, the seller has to go back to the lien holder with a new net sheet and get a new approval. It might happen. And you might get a date with Angelina Jolie this weekend. So if you want a pest clearance, or a roof certification, or some repairs to obvious problem areas, ask for them in the original offer. If you find something else after you do your inspections, by all means ask for repairs. But you'll also want to take stock on whether or not you can live with the deal if you don't get them.

Tip #5 - Show a little compassion

Chances are pretty good that the sellers don't really want to sell this house. Increasingly, these are going to be people who are experiencing some very stressful personal trials, things like job loss and divorce. So act in good faith, and try to be reasonable about what you ask of them. Be as accommodating as possible with things like inspection schedules. Don't try to nickle and dime things for the sake of "winning". Be glad it's not you in their position, and try to treat them the way you'd hope to be treated if it were you.

Tip #6 - Be patient

I'm coming back to this to wrap it up, because it's the key. We've seen approvals in 2 weeks, and we've seen them take a year. There's no certainty going in as to how it's going to go. Sometimes it's like peeling an onion, you just keep finding one layer after another. But if this is the house that you want to be your home for the next 10, 20, or 30 years, what's a little bit of hassle in the long haul? Just strap yourself in and hang on tight. Think of all the great war stories you'll have for your friends.

Monday Morning Numbers 7/26/10

2010-07-26T07:02:00.000-07:00

Good morning! I'm in good spirits today because I pulled in my first cherry tomatoes of the year yesterday. A whopping harvest of 4 round, red little pieces of nirvana. All of my plants are very late producing this year for whatever reason, but my cherry plants at least are getting huge and appear to be ready to produce big time. But you aren't here to read about my tomatoes - let's take a look at some numbers:

Active Listings: 115

Contingent Listings: 36

Pending Listings: 43 (22.2% of the inventory)

New listings: 11

Months of inventory: 4.8
Click here for the updated price per square foot chart.

No big changes this week. I stopped reporting on price changes every week quite some time ago, but it's worth mentioning that we are seeing an increase in price changes this year. Year to date, we have seen an average of about 6.2% of our active inventory with a price change every week, compared to about 5.2% last year. I suspect that has more to do with the increase in non-distressed listings than anything else.

Later this week I'll have some words of advice for buyers looking at short sales. Make sure you check back in for that.

Focus On Newer Construction

2010-07-22T17:25:00.000-07:00

This week it's time to take a look at activity on newer homes in our market. These are houses that were built in 2004 or later, resale only (not including homes sold by the builders).

We have a pretty good inventory of these homes at the moment, with 12 active listings. Keeping with the current trend of decreased REO activity, only one of those is an REO listing. The bulk of them - 8 - are short sales, with 3 traditional sellers in the mix.

Sales activity has been pretty steady, but not as robust as the market as a whole. Given that the price points on these tend to be a little higher than average, that's not surprising. We have 8 contingent listings (0 REO/7 SS/1 Trad) on the market, and 4 pending units (2 REO/0 SS/2 Trad). We've had 4 sales in the past three months (2 REO/2 SS/ 0 Trad). From that very small number, it looks like prices might have edged up a little over the past few months, but it's a very small data set to use to draw any conclusions.

Next week I'm going to approach the short sale segment of the market from a buyer's perspective, so make sure you come back for that.

Monday Morning Numbers 7/19/2010

2010-07-19T06:57:00.000-07:00

Here we are again on another early Monday morning. Hope everybody had a better weekend than I did. I've been having some computer problems for a while now, so I finally bit the bullet and wiped and reloaded my computer. Boy, do I know how to have fun... On to the numbers:

Active Listings: 115

Contingent Listings: 39

Pending Listings: 41 (21.0% of the inventory)

New listings: 12

Months of inventory: 4.6
Click here for the updated price per square foot chart.

The trend towards increasing inventory continues this week. Over the past couple of months listing activity has increased slightly, and the number of pending listings has been dropping. We're still lighter on inventory than we'd like for most buyers, but if the current trend holds for a little while longer we'll likely start to see a lot fewer multiple offer situations on properties.

Later this week I'll take a look at activity on newer homes in our market.

2010 Second Quarter Update

2010-07-15T14:34:00.000-07:00

As I've gotten a little older, I've noticed that the years tend to go by in rapid fire succession, each one shorter than the last. Case in point, I'm still adjusting to writing 2010 on my checks, and we've blown through half the year already.

Cue a schmaltzy Harry Chapin tune...

What that means for us today is that it's time for our second quarter wrap-up extravaganza. As I've done for the past few quarters, the first set of numbers here are combined numbers from the Lompoc Valley and Central Coast Regional MLS's.

We had very robust sales activity in the quarter, with 132 sold units. That is a 48.3% increase over the second quarter of last year, and it was the biggest quarter since the third quarter of 2005. A big part of that activity was probably attributable to the tail end of that first time buyers' tax credit. The average price per square foot ticked up this quarter for the first time in quite a while. It's been almost 5 years since we've had a measurable increase from one quarter to the next. That's encouraging.

Another potentially positive sign is that we had a much lower percentage of distressed property sales for the quarter. 34.8% of our sales were REO's, 23.5% were short sales, and 41.7% were traditional sellers. Some part of that is due to something that I haven't really been reporting on that we've started seeing - the flip is back in vogue. We have a handful of investors around town who are buying, rehabbing, and reselling properties. I'd have to manually go through to figure out how many, but that's one of the sources we've been seeing for non-distressed sales. In any case, I think that the increase in prices and the decrease in REO percentage is not a coincidence.

Now we're moving on to the numbers that come from the LVAOR MLS only:

We had 166 new listings for the quarter, up 21.2% from 2Q 2009. The trend to more traditional sellers continued, with 42.8% of new listings not in distress. 28.9% of our new listings were REO's and 28.3% were short sales.

Government loans continue to dominate our financing, with 44% of transactions being funded with an FHA loan, 17.4% VA loans, 17.4% conventional, and 20.2% cash. That cash number is down a bit from the last quarter, but it's still pretty astounding.

Things haven't changed much with the time it takes to get a property sold. The median days on market for our sold units was 21, and the median escrow period was 43 days. Both of those are very close to the numbers of the past couple of quarters.

We are still very much in a competitive market for buyers, with multiple offers driving prices up in many cases. 60% of our sales closed at or above the list price, down a little bit from last quarter but still a very telling number.

Looking forward, I'd be surprised if the transaction volume that we saw last quarter holds for much longer. Our pending sales have been dropping somewhat over the past couple of months, and the tax credit is a thing of the past. On the other side of the coin, interest rates are still beyond incredible and prices are still very much in the affordable range for a lot of buyers, so I don't see activity dropping hard. I don't know if the price appreciation that we saw this quarter will continue. That's going to depend on a lot of factors, not the least of which is the local employment picture. I wouldn't be surprised to see a period of a year or two where we see some minor amount of up and down on that price chart. Time will tell.

Monday Morning Numbers 7/12/10

2010-07-12T07:12:00.000-07:00

Good morning! Let's take a look at this week's numbers for the Lompoc Valley real estate market:

Active Listings: 106

Contingent Listings: 43

Pending Listings: 46 (23.6% of the inventory)

New listings: 14

Months of inventory: 4.5

Click here for the updated price per square foot chart.

No big changes this week. New listing activity was a little better than I would have anticipated with the holiday last week, but I guess everybody was celebrating early.

Not a lot to talk about this morning, so I'll save all the typing for the 2nd quarter update later this week. Check back in later this week - should be interesting.

Focus On South Vandenberg Village

2010-07-07T15:20:00.000-07:00

We're back around to South Vandenberg Village this week on our neighborhood reports. For some background on the area and a description of the homes in the area, go to my first post on the topic from last year. As a quick refresher, we're talking about houses only - not condos - and we're excluding Providence Landing, which is covered when I report on newer construction activity.

The last couple of times I've covered the area there hasn't been a lot of activity. Some things never change. We actually have a few more listings there now than we had earlier this year when I last reported on the area. We're up to a whopping 5 active listings (1 REO, 2 short sales, and 2 traditional listings). Woo hoo. We have no contingent sales showing here at the moment.

Sales activity has been slow there with the lack of inventory recently. We only have one pending unit on the market, a traditional seller. We've seen two sales there in the past 3 months, one REO and one short sale. It might be that we're starting to see a little more activity there, but we're going to need quite a bit more to be able to pinpoint any kind of trend.

Next week I'll have the 2nd quarter wrap-up extravaganza. Lots of good stuff to report, so make sure you check back in for it. I'm aiming for a Thursday afternoon post.

Monday Morning Numbers 7/5/10

2010-07-05T10:00:00.000-07:00

Hope you all are enjoying a great holiday weekend. We are taking a couple of days off in a row for the first time in a while, which is a treat for us. Stayed up late, slept in, and I'm late getting this post out this morning. If you were looking for it at 7:00 this morning, sorry. I was still in bed... Let's look at this week's market stats:

Active Listings: 111

Contingent Listings: 43

Pending Listings: 43 (21.8% of the inventory)

New listings: 6

Months of inventory: 4.6

Click here for the updated price per square foot chart.

Nothing too big to report here this week. Last week was a slow activity week, and this week might be as well with most people taking today off. We had a very slow week for new listings last week after having some relatively robust activity there for the past several weeks.

I'm not sure what the topic is going to be for later this week, but I can tell you that next week we have the 2nd quarter wrap-up on tap. I'm looking forward to compiling the numbers and seeing how the quarter went for us.

Some thoughts about strategic defaults...

2010-06-30T14:39:00.000-07:00

A few weeks ago when I did an REO update I mentioned that I thought that one of the sources of upcoming REO's in our market was some potential "strategic defaults". And sure enough, a day later I saw this article about the topic, which I followed up with the next day. At the time I thought that I'd be through with that topic for a while.

Well, not so fast there, sport. Last week we saw this announcement from Fannie Mae on the topic. It pretty much echoed and drove home that CNN article from a few weeks ago. And I don't think we've heard the last of these types of announcements.

Let's back up here a little bit. What is a "strategic default" anyway? What we're talking about here are homeowners who can afford to make the payments on their mortgage, but choose not to as a calculated financial decision. Let's say someone bought a house in 2006 for $450,000, but now that house is worth around $230,000. They financed it 100% like so many people did in that period. They make good money, and their payments aren't outside the affordability range for them, although they are much higher than the guy down the street who just bought a very similar house. They're probably twice as much as it would cost to rent a similar house. There's a school of thought that says that if you find yourself that far upside down in a loan, you should just stop paying your mortgage, let the bank take the property back in foreclosure eventually, and take your lumps on your credit. You'll save up a bunch of money, and in a few years it'll all blow over, and you can buy another house like it for less money.

I'm not a subscriber to that theory. First of all, we aren't talking about a few years. We're talking about 7 years now before Fannie Mae guidelines - the guidelines that are followed by most conventional lenders - will allow a borrower who has defaulted on a mortgage without a demonstrable hardship to qualify for another loan. It appears that the lenders are talking about some leniency for those who had a legitimate financial hardship that caused a foreclosure. Fannie is talking about as little as 2 years for borrowers who try to work things out via a short sale or deed-in-lieu. So if you think that you will want to own a home again before 7 years, this may not be a good choice for you.

The second reason I think that this could be a bad idea for a lot of borrowers is the potential of a deficiency judgment. In some states that's a very real possibility regardless of the type of loan, and regardless of the reason for the default. In California, the laws are a little different, and purchase money loans are typically protected from a deficiency judgement. But if you refinanced that loan somewhere along the line, that protection goes bye-bye. There's a bill going through the Legislature that will extend that protection to refinanced loans with some limits, but it's not through yet, and the banking lobby is fighting it. So we'll see what happens there.

Proponents of the strategic default route say that this isn't a moral issue - it's simply a dollars and cents decision. There is a contract between the borrower and the lender, and the contract lays out what happens if the borrower doesn't perform. True enough. But the way I look at this is a little different. I don't want to get on my soapbox here, but I don't think you can divorce this decision from the bigger picture. More strategic defaults means more foreclosures. More foreclosures are bad for us in a lot of social and economic ways, and the longer we go through this cycle, the more painful this is going to be. None of us likes to have the neighbor that drags down our property values by parking five cars in the driveway (and on the lawn) and letting his yard get overrun with weeds. By the same token, none of us are going to be fond of the neighbor who abandons a home and lets it go to foreclosure when it could have been prevented.

Bottom line here is that the powers that be in the mortgage world are taking a hard line on strategic defaults. They may be cutting some slack to the borrowers that legitimately had a hardship and couldn't afford their payments. But if you can afford to make your agreed payment and choose not to do so, they're not going to be so forgiving. If you ask me, that's as it should be.

Monday Morning Numbers 6/28/10

2010-06-28T06:56:00.000-07:00

Hope everybody had a good Flower Festival weekend. I hadn't made mention of it here, but the Lompoc Valley Association of Realtors had a float in the parade this year for the first time in a long, long time. I spent a little time on it running up to the big push on Friday, when we were putting fresh flowers on. And Friday was a long day of gluing flowers. We had a big crew of agents, escrow officers, lenders, and other affiliate members of our association out working on it. Big congratulations and thanks to our friend and colleague Connie Barlow at Century 21 for heading this up and working like a maniac on the project for months to make it happen. It turned out to be really cool - maybe you saw it. The one with the octopus. We got beat out for first place by the Elks, but we had a huge crowd pleaser.

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

Active Listings: 111

Contingent Listings: 46

Pending Listings: 43 (21.5% of the inventory)

New listings: 11

Months of inventory: 4.4

Click here for the updated price per square foot chart.

No big change in the numbers this week. Our inventory has jumped up after month of being nearly non-existent, and pending sales have dropped off a bit. It's probably an indication that the third quarter is going to see some decline in sales this year unless we start to see a jump in pending sales pretty soon.

Later this week I'm going to go back into strategic defaults. I had made a mini-post about it a few weeks ago, but there's some new information that has come out recently.

Focus on Equity

2010-06-23T13:58:00.001-07:00

I've been telling you that I had a short sale update on tap for this week. As I've thought more about what I'm about to share with you, I've realized that this really isn't so much a short sale update. It does affect what we could have coming down the road in terms of short sales, but it's bigger than that. So it's more of a look at what our market looks like in terms of homeowner equity.

I had said some time last year (I can't remember which post) that I wanted to get a good source of data on loan activity on a local level. It's critical information to knowing what is coming in our market, especially in terms of distressed property activity. Well, I've found a couple of good resources. One of them I used a few weeks ago to project upcoming loan resets. There's another source I found, REiSoucre.com that also has some good numbers from public records. I'm using them here because of technical reasons having to do with the way they lay out their data.

The peak years for price in our market were very active years for mortgage activity. Part of the reason for that was robust sales activity, but a larger factor was the boom in refinancing. Interest rates were very good, and a lot of homeowners started to look at their property with dollar signs in their eyes. This didn't just happen in Lompoc - this was a national phenomenon. Freddie Mac estimates that we as a nation took out $75-80 Billion per quarter in 2006 & 2007. Some of that went back into homes in upgrades and maintenance, but a lot of it went to pay off consumer debt and to buy expensive toys and vacations.

I'd better not get derailed on that topic, we'll be here all day...

So let's look at what we know about the Lompoc Valley. I've seen a few different numbers for the total number of houses and condos in the Lompoc Valley, ranging from about 10,000 to 12,000. REiSource.com says it's 10,787, so let's use that number for this purpose. I took a look at the outstanding first trust deeds that are recorded against properties in our market by recording date. A couple of technical points here: These are first trust deed recordings only, no second mortgages or equity lines. They include both purchase money and refinance loans. And they don't include loans that are no longer active - either having been paid off or foreclosed. And with all of that said, here are the numbers for our peak years:

2003 - 1102
2004 - 815
2005 - 1290
2006 - 969

The total here - 4176 active first trust deed mortgages in the Lompoc Valley that were recorded during that peak 4 year period. That's about 39% of the total number of households in our market.

Not all of those loans are upside down. Most of them maybe, but not all of them. Another tool that REiSource has is a way to look at properties that they thought had negative equity - more debt than value on a property. They do this with an automated valuation tool that they have. Now I'll tell you up front - I'm not a big fan of automated valuation tools. I think that they miss the mark a lot of the time in our market, and can be wildly off value in some cases. But I think that they are too high at least as often as they are too low. REiSource estimates that we have 4410 houses and condos in the Lompoc Valley that have more debt than value. That's 41% of our market area. And I think that might be a conservative estimate.

So why is this important? Well, it tells me that distressed property sales are here for the foreseeable future. Approximately 4 out of 10 houses and condos in our market won't sell right now for enough to pay off the liens. Until we get property values back up, distressed property sales are here to stay. We'll get there, but it's going to be a long, bumpy ride.

Monday Morning Numbers 6/21/10

2010-06-21T07:12:00.000-07:00

Welcome to another edition of Monday Morning Numbers. As always, the Lompoc Real Estate Blog is 100% Vuvuzela free! Let's take a look at our market numbers for this week:

Active Listings: 109

Contingent Listings: 43

Pending Listings: 42 (21.7% of the inventory)

New listings: 14

Months of inventory: 4.0

Click here for the updated price per square foot chart.

Another pretty active week for new listings coming on the market has driven our inventory up more, and we are now over 100 active listings for the first time since last May. We're still running about the same months of inventory level that we've had all year, but the raw numbers and the declining number of pending listings makes me think that we'll start to see our months of inventory increase somewhat in the next month or two.

And remember how I had been noting that a big percentage of new listings coming on were traditional sellers in the past couple of months? Well, over the past three weeks, only about a third of the new listings were traditional sellers, and the rest were short sales and REO's. That's down a little from where it had been. I'll keep watching it to see if there is a change in that trend.

Later this week I'm going to have some loan numbers to share with you that might give us some insight into what's coming down the line in short sales. You'll want to check back in for that.

Focus On North Vandenberg Village

2010-06-19T15:59:00.000-07:00

I know, I know, it's Saturday and I should have had this done a couple of days ago, and I know that everyone has been on pins and needles waiting to see what's happening up in North Vandenberg Village. Sure... OK, for a description of the area and properties we are covering here, go back to my first post on this from last year.

Things have been generally slow up in this area in recent months. We only have 8 active listings in the area (2 REO's, 2 short sales, and 4 traditional sellers). And there are no contingent listings to report in the area as of this afternoon.

Sales have been slow as well when you look at raw numbers, but in terms of months of inventory, we're probably a little more robust there than the market as a whole. We only have 2 pending sales in the area, both traditional sellers. We've had 8 sold units there in the past three months (2 REO/1 SS/5 Trad).

It would appear that we are seeing a little less activity recently here in distressed properties, which is probably helping hold values a little bit. There aren't a lot of data points to use, but when I compare the sales over the past three months to the three months previous to that it looks like prices have been very flat recently.

Next week I'm going to go back into a short sale discussion. I know it hasn't been all that long since I covered them, but I have some new and interesting data to share with you that might give us some insight into what to expect for the foreseeable future.

Monday Morning Numbers 6/14/10

2010-06-14T06:46:00.000-07:00

Good morning! I came in here to post my Monday Morning Numbers post and I noticed that I didn't have last week's "Focus On" post in here. I had to sit and scratch my head - I know I sat down and wrote a condo update last week. So I took a look, and there it was sitting on the list in the drafts. Go figure. I just posted it, so now we can get after this week's numbers:

Active Listings: 99

Contingent Listings: 45

Pending Listings: 44 (23.4% of the inventory)

New listings: 15

Months of inventory: 3.8

Click here for the updated price per square foot chart.

We had a very active week in our MLS. In addition to the 15 new listings, we had 15 closings and 12 price changes. We're approaching 100 active listings - we haven't been there in over a year. But because we've had a lot of sales in recent months, the months of inventory remains low. We'll see how long that holds, though, because our pending listings have been dropping. In terms of percentage of inventory, we're at the lowest level of pending listings since May of last year.

Later this week I'll take a look at North Vandenberg Village. I might even remember to post it...

Focus on Condos

2010-06-11T11:52:00.000-07:00

This week we're back around to condos on our continuing area/market segment carousel. We have some minor changes in market conditions here since I last reported on this segment back in January, but things haven't really changed a lot.

We currently have 14 active condo listings on the market this afternoon. One of them is an REO, 8 are short sales, and 5 are traditional sellers. It's kind of interesting to see more traditional sellers in this segment, but a lot of them are in the newer Providence Landing condos - there's a long and technical discussion about those that I'll spare you.

Sales activity has picked up in the segment in recent months. We currently have 9 contingent listings, all short sales. Additionally, we have 6 pending units (3 REO/2 SS/1 Trad). We've had 14 sold units (7 REO/3 SS/4 Trad) in the segment over the past three months, which is up quite a bit from when I reported on this in January.

Demand for condos still appears to be somewhat less than it is for entry level houses, but it's still not bad. Prices appear to have flattened out in recent months, and unless we see a further dip in the overall market, I expect that we'll be pretty flat here for a while, with recovery coming a little later than it comes to the entry level house segment of the market.

Next week I'll have an update on North Vandenberg Village.

Monday Morning Numbers 6/7/10

2010-06-07T07:50:00.000-07:00

Hope you all had a great weekend in this magnificent late spring weather that we've been having. God, I love living in this part of the world... Let's take a look at our market's vital signs this morning:

Active Listings: 92

Contingent Listings: 46

Pending Listings: 54 (28.1% of the inventory)

New listings: 10

Months of inventory: 4.0

Click here for the updated price per square foot chart.

We're down slightly for inventory this week, but nothing all that noticeable. We appear to be in a pretty stable place right now for our market by all measures that I use to track things, and I don't see anything coming that will be making any major changes. It seems like the demand side of the equation is a little lighter, with not quite as many multiple offers on properties right now, but that's kind of hard to track. And sometimes, "it seems like" can be the three most dangerous words in the English language.

Later this week I'll update our condo market.

A followup to yesterday's REO post

2010-06-03T15:27:00.000-07:00

Hey, a bonus post this week! Yesterday when I wrote about what we have coming down the road in terms of REO's, I mentioned that one of the big drivers of foreclosures over the next few years could be strategic defaults. And I said that I'd cover that topic sometime soon. Well, it's sooner than I thought.

If you read this blog regularly, you'll know that I don't usually link to outside sources. But today I came across this article talking about the consequences of strategic defaults, and it pretty much says what I was going to tell you. So rather than applying my usual tortured prose to the topic, I'll just let the professional journalists cover it.

'Nuff said.