C.a.r. Reports Home Sales Decreased 21.1 Percent In May

[SeanO]

The 21% decrease in California sales volume is based on May data, and is year over year. The decline from April was 5.6%. C.A.R. stands for California Association of Realtors. Full article below.

See my next post regarding the reported increase in median price.

SeanO

C.A.R. REPORTS HOME SALES DECREASED 21.1 PERCENT IN MAY
The median price of an existing single-family home in California increased 8 percent in May and sales decreased 21.1 percent compared with the same period a year ago, C.A.R. recently reported. "This is the first time since November 2001 that the median price did not increase by double digits, reflecting the return to the more balanced market that we have anticipated," said C.A.R. President Vince Malta. "Interest rates, while still historically low, continue to impact sales as did the inventory of homes for sale, which reached nearly a six-month supply in May."

According to the report, the median price of an existing, single-family detached home in California during May 2006 was $564,430, an 8 percent increase over the revised $522,530 median for May 2005. The May 2006 median price increased 0.5 percent compared with April's revised $561,750 median price. Also in May, closed escrow sales of existing, single-family detached homes in California totaled 488,260 at a seasonally adjusted annualized rate, down 21.1 percent compared with the sales pace recorded one year earlier and down 5.6 percent from home resale activity in April.

[jk]

may foreclosures up 28% yoy

Irvine, Calif. – June 26, 2006 – RealtyTrac™ (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its May 2006 U.S. Foreclosure Market Report, showing 92,746 properties nationwide entering some stage of foreclosure during the month, an increase of less than 2 percent from April 2006, but still a 28 percent increase from May 2005.

[SeanO]

I've been actively buying foreclosures for 4 years. I know guys that have been buying for 20+ years. Last year foreclosures were at record lows... which makes sense as everyone had enough equity to get out. The deals that did sell at auction typically did not have a reasonable explanation for having sold - typically some form of bizarre denial on the homeowners part.

That said, their numbers are probably close nationally. Locally I'm seeing a 100% increase YoY, and and about a 15% increase MoM.

BUT, that's not the whole story. The interesting part is that far fewer homes are actually being sold at auction. There are now many options for people to get out of foreclosure before sale. What is coming to sale, are deals that are overencumbered, have no one bidding on them, and are going back to the lender. But be clear, actual sales volumes are still very low.

Having reviewed most foreclosure data sources, RealtyTrac is among the worst. Data is not timely, or complete. Useless for professional buyers in my opinion.

[jk]

foreclosures

I've been actively buying foreclosures for 4 years. I know guys that have been buying for 20+ years. Last year foreclosures were at record lows... which makes sense as everyone had enough equity to get out. The deals that did sell at auction typically did not have a reasonable explanation for having sold - typically some form of bizarre denial on the homeowners part.

That said, there number are probably close nationally. Locally I'm seeing a 100% increase YoY, and and about a 15% increase MoM.

BUT, that's not the whole story. The interesting part is that far fewer homes are actually being sold at auction. There are now many options for people to get out of foreclosure before sale. What is coming to sale, are deals that are overencumbered, have no one bidding on them, and are going back to the lender. But be clear, actual sales volumes are still very low.

Having reviewed most foreclosure data sources, RealtyTrac is among the worst. Data is not timely, or complete. Useless for professional buyers in my opinion.

what's a good source for foreclosure data? also, would you mind spelling out a bit what happens instead of foreclosure?

[SeanO]

In California serious foreclosure investors watch all the local papers or go directly to the county recorders office. Those are the most accurate and timely sources.

As for nationwide data providers try ForeclosureS.com. There is some lag to their data, but it is better than most.

As for what happens instead, let me first lay out the process. In California the first step in Foreclosure is the recording of a Notice of Default with the county recorder. This basically happens after the lender decides other collection options aren't working. Typically at least 90 days after they stop making payments and sometimes a year or more later. 3 months after the Notice of Default is recorded, a Notice of Sale can be recorded. Twenty one days later the property can be sold at auction. Very few actually sell at this time. Typically sales are postponed from 1 week to 1 year before they are sold. Adding it up most borrowers haven't made a payment for at least 6 months until their property is sold, and for many it is a year or more.

Most statistics are related to Notice's of Default. Around 25% of those make it to Notice of Sale. Around 10% of those are actually sold. I'd estimate that the number actually sold averages 2-5% of those that enter the process and are commonly reported as "foreclosures".

Here's what happens to the rest:
1. Bankruptcy... this usually just delays foreclosure, though with a good attorney and well structured chapter 11 plan it can work.
2. Reinstate - they come up with the past due amount (parents, take funds out or retirement savings, etc.)
3. Refinance - they are HEAVILY marketed to by subprime lenders.
4. Second mortgage / equity line - if they haven't already used one for their car. :-)
4. Sell - again HEAVILY marketed to by realtors, and if there is equity, investors.
5. Loan modification - lender adjusts terms and adds past due to balance
6. Forebearance - temporarily lowers or eliminates payments in exchange for higher payments later until past due amount, with interest, is repaid.
7. Short-sale - allows them to sell for less than the amount owed. Not common lately, but will become more so as homes go under water.
8. Deed-in-lieu of foreclosure - give it back to the bank without the auction, lenders rarely do this.
9. Lender doesn't sell. Very surprising but true, especially if you are over 65. A number of lenders (typically offering high interest rate seconds) have a stated policy of not taking senior citizen's homes to foreclosure... too much bad press. I'm not kidding. The lenders figure they will ulitmately get paid when the borrower dies and the estate sells the property. If you are over 65 I wouldn't count on this, but it happens regularly.
10. Various scams. These usually just delay the foreclosure, while enriching the scammer at the ultimate cost of the borrower and lender.

Note that foreclosure laws do vary by state. California uses a deed of trust, which is technically different than a 'mortgage' and allows for non-judicial foreclosure (no court trial). States also vary in whether or not they allow the lender to go after the borrower for any deficiency (if for example the property sells for less than what is owed). Foreclosures.com offers a state-by-state overview here: http://www.foreclosures.com/pages/state_laws.asp.

[jk]

thanks sean

thanks for explaining the process. i really appreciate your posts.