Yes, as reported by the AV Press today, home sales in the Antelope Valley (Palmdale / Lancaster, CA) are way WAY up from last year … here’s the numbers released by the Greater Antelope Valley Association of REALTORS:
- 773 homes sold in March 2009 (282 in March 2008)
- 2111 Homes sold Jan 2009-Mar 2009 (654 sold Jan-Mar 2008)
- Average sales price $129,390 in March 2009 (DOWN 46% from March 2008)
- Average sales price $140,401 Jan-Mar 2009 (DOWN 44% from Jan-March 2008)
- About 2500-3000 active listings (DOWN from about 5500 Q4 2008)
So what does this mean? A few things, in my opinion.
First of all, prices are at a level that many homes can be purchased here in the Palmdale / Lancaster area for about the same or less than it costs to rent. Why throw your cash down the toilet by handing it to a landlord when you can be buying your own piece of the American Dream?? If you have good credit and can prove your income, there are plenty of banks dying to give you a loan contrary to all the BS most media outlets (or even your own President for God sakes) would have you believe! Loans are being made every day and I’ve got the closed transaction history to prove it!
Secondly, I believe the $8000 tax credit for home buyers has had a positive effect. I know if I were a first-time buyer looking for a home the Perfect Storm of historically low interest rates, $8000 from Uncle Sam, and deep discounts on REO / Bank-Owned homes here in the Antelope Valley would have me pulling out my checkbook!
How about the drop in prices? Why are prices still dropping if the buyer activity is increasing?? Well, here’s the thing … About 85-90% of the housing market in Palmdale / Lancaster is either REO / Bank-Owned homes or they are short-sale listings. Yes, banks want to maximize profit – I should say minimize their loss – but the main goal is to get the assets off their books as quickly as possible. So this means price reductions until the house gets sold! Yes, the falling prices has slowed to about 1-2% per month (down from as much as 5% in 2007-2008) but they’re still coming down. The only thing really saving us right now are multiple offers bidding the prices UP when the sweet-spot is hit on the list price.
Now, about that elephant … What no one seems to be talking about here is what I am most worried about when people ask me about the bottom of the market here in the Palmdale / Lancaster area. You notice from the stats above that our available inventory has dropped substantially from last year. You know when that happened? Right about January 1st when many REO and short-sale listings didn’t get SOLD but they EXPIRED. What else has been happening in the foreclosure market? The banks have all been adhering to a moratorium on foreclosures and also have been sitting on their toxic assets waiting to see what ‘ol Obama’s bailout was going to entail. This is giving us an artificially low inventory!
As of last week all of the moratoriums have been lifted. Banks are finally organizing their pre-foreclosure work-out plans. They have analyzed their backlog of bad loans and more-or-less know who will qualify for a loan modification. Those loans that can’t be worked out they are now moving forward with the foreclosure process.
Here’s some more stats …
Notice of Default Filings (The first phase of the foreclosure process)
- JAN 2009 – 968
- FEB 2009 – 1338
- MAR 2009 – 1472
As you can see, they are on the rise again. At least 80% of those NODs will go through the foreclosure process and end up being REO / Bank-owned homes for sale. This is just the tip of the ice burg. How about all the loans that were bad before the moratorium was lifted? I predict we are going to see some drastically higher NOD filings in the coming months.
Now here’s the thing – when these banks start putting these homes on the market that they’ve been sitting on since about last September the inventory of available homes for sale it going to shoot back up. How high? Who knows … But when it does, the current buyer frenzy that may be partially attributed to a perceived bottoming-out of the market may soften. The buyers will have more homes to choose from and their sense of urgency lost. This may send home prices into even more of a tailspin and this is what I am most concerned about.
People ask me all the time if I think the market has bottomed out. I say who knows … I wish I had a crystal ball. I just wish the government hadn’t stepped in and interfered with this market correction. I feel that they have delayed the recovery here in the Palmdale / Lancaster area for 2-3 years if not more. Now we have a potentially HUGE backlog of REO homes for sale that are going to need to be dumped and could potentially be even more devastating to our market values than what we have seen to date.
What do you think? Feel free to comment below … And if you have any questions or are looking for a smokin’ deal on bank-owned / REO properties here in Palmdale or Lancaster, drop me a line!
{ 4 comments… read them below or add one }
James,
I agree with you 100%. This moratorium was just a political maneuver so Obama could let the public think the govt would come to the rescue. All it really did was delay the inevitable. Now the banks are going to take even larger losses as the market continued to decline during the moratorium.
There is no way to avoid this backlog of REOs. We just need to work through them and let th market slowly correct itself. I donlt think we've seen the bottom quite yet…
You are so on James,
You could change the city to almost any USA and have the same out come… My investors keep asking me 'are we there'… 'NO NO NO' is what I say… we have a lot of foreclosures to get through before this is over, but it is creating a great opportunity for wealth building for those who are not afraid to wade on in and buy for the long haul, loans are great right now and that will not last forever… the interest rates will go back up, and how knows with banks still closing the doors, they could start mandating even more downpayments on investor loans… and that would be a shame… we need investors to buy property…. oh well…
Agreed, if the government figures out how to shut down investors we'll really be screwed. 1st time buyers have been buying the bulk of my REOs here, but if investors aren't able to purchase we'll never get rid of the inventory that's bound to build up here in the near future.
So here the challenge we are now under a NEW administration a new President. A President who want to say he is for the people. and yet people are becoming more and more out of work and having hard times. Now they are losing there homes at a unbelievably foreclosure rate we have ever seen the American History. Will the bill pass? will look at the odds.
http://www.mofo.com/news/updates/files/15309.html
1. If they really showed us there cards of all the nods and foreclosure to come, and people who have not made a payment for 1yr or 1 1/2 yr without been given a nod. Why? because they want you to think the market is getting better. So now buyers are fighting to get these properties NOW. One yr ago was a different story. Remember 1 year ago when rejected REO sales from the bank and drops of buyer, yet you had and unbelievably inventor of homes.
So now they want the people to spend money get the economy moving and they are doing it. if they told the real true the investors and buyers would hold there pocket books.
2. Let say the REOs open up again like last year. The investor would wait and the buyers would want a BETTER DEAL!!!
3. Let's not for get the good guys. The ones who did not get that bad loan or did not lose his or her job? He also was effected by the neighbor who got to buy a home(fake buyer's), way out of his league. Don't you fine it funny that they are not giving the 1.5 and up REO homes the home in the high end water areas, more who have gone back to the bank. They are still sitting vacant. Why ? because the banks can not get the value of the bottom line of what they want and the current homeowner good guy value would drop and a Godly rate and become so unreal. Doing the hype i remenber the Dream Mag. Lender would run adds with buy a 2.5 and up home 100% fin. or 1% down int only. fix for 2 years. People who bought way beyond there level of buying power in areas they should have never been in. Yet those home were are not see alot of why? the Good guy value factor.
http://loanworkout.org/2009/03/california-foreclo…
Look banks are not nice or liked right now. Congressmen and women want to keep there job and the people are blowing there phones up about the lost of homes, vacant neighbor homes, and Mr. Banks who calls daily from India, and who bring fear into there homes. The banks are not nice, and are all greed right now. The people want justice. and with AB 603 may get it. I do not like the bill at all it not fair. Yet the people feel the banks have not been fair with them. Let's watch the out come of this one. AB 603.
http://www.theloanmodlady.com
Shirley Husar