Sweet Orange

The following information provides some insight into the status of the housing market in Orange County. In addition to shedding light on the percentage of Orange County housing that is in distress, this information shows that, although most statistics provide helpful information, considering all data with some skepticism is wise.

According to Steve Thomas of Altera Real Estate, on April 30, 2009, 35.9% of the Orange County homes on the market were in distress. Here is the Altera Orange County breakdown:

• 10,363 homes on the market as shown by the active-listing inventory
• 3,724 distressed homes on the market
• 35.9% of Orange County homes in distress (Source: Altera Realty)

Altera numbers also stated that 29.6% of Irvine homes on the market were in distress. Here is Altera’s Irvine breakdown:

• 686 homes listed for sale
• 203 homes in either foreclosure or a short sale
• 29.6% of Irvine homes in distress (Source:Altera Realty)

However, at that time, Trulia numbers showed a more pessimistic picture. Here is Trulia’s Irvine breakdown:

• 1810 resale and new homes on the market
• 741 homes in pre-foreclosure, auction or bank-owned stage of foreclosure
• 41% of Irvine homes in distress (Source: Trulia)

In addition, Trulia’s numbers showed that Costa Mesa has an even higher percentage of distressed homes on the market than Irvine.

• 780 resale and new homes on the market
• 416 homes in pre-foreclosure, auction or bank-owned stage of foreclosure
• 53 % of Costa Mesa homes in distress (Source: Trulia)

All these numbers are helpful, but, as you see, the Altera numbers show a rosier picture for the Irvine housing market than the Trulia numbers do.

In addition, based on these numbers, most would conclude that the Irvine housing market is in better shape than Costa Mesa’s. However, according to recent Altos Research numbers, the Costa Mesa housing market is in slightly better shape than Irvine’s, and both the Irvine and Costa Mesa housing markets are in better shape that the high-end beach communities.

The bottom line is that the numbers can be worked many different ways, and sometimes the same numbers are used to support opposing viewpoints. So, buyer beware, and look at a range of statistics from different sources to get a clear picture of market conditions.

Update: I just came across some articles on this subject by Jonathan Lansner: “Playing the numbers” and “Perhaps home sales haven’t bottomed yet.“  In the first, he writes about the varying home depreciation numbers that different companies report. In the second, John Burns of John Burns Real Estate Consulting gives a perspective on the subject. SW 6-3-09

The flowchart found in the my next post will explain the foreclosure process, including the difference between a trustee sale and a bank (REO) sale. (If the flowchart image isn’t clear, try viewing  it at 125%, especially if you are using the Internet Explorer browser. Missing lines magically appear when viewed at the larger size. Or better yet, try using either the Mozilla FireFox or Safari browsers.)

For more information on understanding the foreclosure process, avoiding foreclosure, and investing in foreclosures, see these articles:

• Yahoo Real Estate Foreclosure Center— provides an overview of the foreclosure process, information on buying a short sale, information on buying at a trustee auction, and information on buying bank-owned property
• US Department of Housing and Urban Development’s (HUD) Guide to Avoiding Foreclosure—as the name implies, provides information on avoiding foreclosure
• Wikipedia’s Foreclosure entry—provides a overview of the process and  a link to information on how we got to where we are today (Real Estate Bubbles)
  

You might also be interested in California Foreclosure Institute’s free foreclosure investment workshops at the Irvine Heritage Park Library. The next Irvine workshop is scheduled for June 30 at 6:30 pm to 8:30 pm. Another workshop is scheduled for Brea on July 1 at 6:30 pm to 8:30 pm. These workshops are ongoing; therefore,  if you can’t attend on these dates, more options will be available.

Finally, to get a sense of what is happening with foreclosures in Orange County, see these articles by The Orange County Register’s Matthew Padilla and Jeff Collins:

• “Banks holding more O.C. foreclosures“
• “Foreclosures filings hit record in O.C.“
• “Foreclosures account for 4 out of 10 O.C. home sales“

Tomorrow: the foreclosure flowchart

Chart Courtesy The Orange County Register

Many of Orange County foreclosures fit into one of two categories. One are those homes at the low end of the housing market, such as much of Santa Ana; the other are newly built homes that have a relatively high price tag. Apparently, many investors thought that the newly built, higher-priced homes would make a good flip. Well, we all know what happened with that.

An example that fits in this second category is the Irvine neighborhood that I have been writing about this week, the Irvine Business Complex (IBC).  As I wrote in those posts,the IBC is Irvine’s evolving, mixed-use, urban-living neighborhood.

A look at the public notices always shows a large number of IBC homes set to go on the trustee’s auction block (Note: See one of next week post for a flowchart that shows the difference between a trustee sale and a bank or REO sale.). As yesterday’s post showed, the selling price per square foot in the IBC has taken a sharp drop. The high number of investors taking a loss and the numerous foreclosures are the most likely reasons for the large price drop. The median selling price is currently $219 per square foot.

The following IBC homes are not necessarily in default, but are examples of homes currently on the market in the IBC. Note that a comparison between the current selling price per square foot and the list price per square foot of the homes shown below are not a good match up. These sellers will most likely have to drop their price, if they want to sell.

At 3267 Watermarke Place (Astor Court), a one bedroom, 635 square foot condo, built in 2005 with an asking price of $225,000 ($354/SF). HOA fee is $286 per month.

At 2330 Watermarke Place (Watermarke), a two bedroom, 1123 square foot condo, built in 2003 with an asking price of $355,000 ($316/SF). HOA fee is is not listed, but my guess is that it is similar to the HOA fee listed for 3267 Watermarke Place (see above).

At 5045 Scholarship (The Plaza), a one bedroom, 1175 square foot condo, built in 2007 with an asking price of $573,580 ($488/SF).  HOA fee is not listed. I’m looking for this one to have a sharp price drop before it sells.

At 8115 Scholarship #903 (The Plaza), a two bedroom, 1675 square foot condo, built in 2007 with an asking price of $849,000 ($507/SF).  HOA fee is $1,093. I’m looking for this one also to have a sharp price drop before it sells.

That’s it for this week’s posts.

Next week: a look at the most affordable housing in the IBC, a flowchart of the foreclosure process, and maybe a few other things