Supply of distressed home listings cut in half

April 16th, 2012, 10:00 am ·  posted by 

OC Register

Where’s the rush of foreclosures that were purported to come swamp the market?

Steve Thomas of publishes every two weeks a report on the supply of local homes for sale and the share of that inventory that’s distressed properties — foreclosures and short sales. His latest report — as of April 13 — says …

The distressed inventory has dropped 49% so far this year. Similar to the overall inventory, the distressed inventory has dropped unabated so far this year. The consistent drop dates back to October 2011 when there were 3,563 distressed properties on the market. Today there are 1,602, a 1,961 home drop. There are 328 foreclosures in all of Orange County, a drop of 64 in the past two weeks. The inventory started the year with 620. The foreclosure inventory has not been this low since October 2009. The expected market time is .7 months, almost untouchable for a buyer unless they come to compete. Short sales have become almost as hot as foreclosures. After shedding 164 homes in the past two weeks, the short sale inventory now totals 1,274, levels not seen since the distressed inventory began to rise in 2007. The expected market time for short sales is .9 months, a very hot sellers market. The short sale process is improving, but only slightly, almost undetectable to the untrained eye. They still take a long time to put together and the more complex the short sale (multiple lenders, delinquent HOA dues, unpaid property taxes, liens against the title), the longer it takes to put together. Distressed properties now represent 25% of the overall active inventory versus 35% one year ago. With demand for distressed properties so strong, good deals will be much harder to come by. That’s not to say that a lender won’t get it wrong and price a home incorrectly. I have seen it in my own backyard. Instead, it means that when demand drops anywhere below 1.5 months, the seller, and banks, are in the driver’s seat and NOT buyers.!

Some of the details …

  • 1,602 distressed Orange County properties were listed for sale — 25% of the 6,354 listed overall.
  • 1,883 new escrows were opened to buy distressed Orange County properties in the past 30 days. That is 53% of the 3,553 new pending sales countywide.
  • Thomas calculated “market time” — cross of supply and new escrows showing how long, theoretically, it would take to sell inventory. Using that “market time” math, there’s 0.85 months worth of distressed properties on the market vs. 2.71 months worth of non-distressed homes. So, distressed homes currently sell 3.2 times faster than non-distressed homes.
  • 29% of the distressed listings were foreclosures being sold by banks; 71% were short sales.
  • 47% of the distressed listings were attached homes; 53% were detached homes.
  • 31% of distressed Orange County listings were in ocean-close communities.
  • Pricey? 67 of the listed distressed homes were price above $1 million — 4% of all distressed listings.
  • Cheap? 1,195 of the listed distressed homes were priced $500,000 or less — 75% of all distressed listings.
  • Chart summarizes trends in Thomas’ report, distressed counts and share of all listings (plus, pending sales and market time — demand divided by inventory.)

Highlights …

All O.C. Distressed All Pct. Distress
Total 1,602 6,354 25.2%
By type of distress Pendings Listed Time (months)
O.C. foreclosures 469 392 0.84
O.C. short sales 1,414 1,438 1.02
By home type Distressed All Pct. Distress
Attached homes 746 2,286 32.6%
Detached 839 4,040 20.8%
By price slice Distressed All Pct. Distress
O.C. $0-$250k 431 1,014 42.5%
O.C. $250-$500k 764 1,892 40.4%
O.C. $500k-$750k 254 1,284 19.8%
O.C. $750k-$1m 78 705 11.1%
O.C. $1m-$1.5m 31 505 6.1%
O.C. $1.5m-$2m 20 320 6.3%
O.C. $2m-4m 14 421 3.3%
O.C. $4m+ 2 252 0.8%
By city/High share Distressed All Pct. Distress
Portola Hills 6 9 66.7%
Stanton 19 29 65.5%
Anaheim 162 298 54.4%
By city/Low share Distressed All Pct. Distress
Seal Beach 234 4 1.7%
Corona Del Mar 116 3 2.6%
Laguna Beach 247 18 7.3%

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