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Santa Ana, Anaheim top O.C. in distressed homes for sale
November 5th, 2007, 3:24 am · 145 Comments · posted by Jon Lansner/O.C. Register columnist
Market watcher Steve Thomas at Re/Max Real Estate Services in Aliso Viejo has a new stat out: foreclosures and short sales listed for sale — what I’m calling distressed properties — as a share of total for-sale inventory by major O.C. communities. Short sales are where the bank agrees with a troubled borrower to take less than the loan amount due at sale.
The report (derived from MLS listings) shows that as of last Thursday, Santa Ana’s home inventory had the highest share of distressed properties in O.C. at 32.8%, just ahead of Anaheim at 32.6%. While we’ve discussed mid-county housing woes before, it’s noteworthy that the next two communities with high levels of distressed property for sale were Rancho Santa Margarita (31.3%) and Lake Forest (29.8%.) Read how beach towns fared HERE.
Overall, Thomas found 17.5% of all O.C. inventory was of the distressed variety. Here’s a look at the distressed property count and share of inventory by key O.C. neighborhoods ….
| Community | Distressed | % of Inventory |
|---|---|---|
| Santa Ana | 539 | 32.8% |
| Anaheim | 423 | 32.6% |
| Rancho Santa Marg. | 108 | 31.3% |
| Lake Forest | 131 | 29.8% |
| Laguna Hills | 60 | 25.4% |
| Foothill Ranch | 22 | 23.2% |
| Garden Grove | 177 | 23.0% |
| Aliso Viejo | 100 | 22.6% |
| San Juan | 66 | 21.7% |
| Buena Park | 74 | 21.1% |
| Mission Viejo | 113 | 19.4% |
| Ladera Ranch | 65 | 19.2% |
| Talega | 33 | 18.3% |
| Westminster | 50 | 18.0% |
| Tustin | 104 | 17.7% |
| Laguna Niguel | 90 | 17.1% |
| Portola Hills | 9 | 17.0% |
| Costa Mesa | 79 | 16.7% |
| Orange | 120 | 16.0% |
| Fullerton | 101 | 15.7% |
| La Habra | 49 | 15.3% |
| Placentia | 38 | 14.8% |
| Fountain Valley | 26 | 13.7% |
| Brea | 24 | 12.3% |
| Anaheim Hills | 37 | 12.0% |
| Yorba Linda | 50 | 10.8% |
| Cypress | 18 | 10.3% |
| Huntington Beach | 91 | 9.7% |
| Irvine | 103 | 9.4% |
| San Clemente | 53 | 9.2% |
| Coto De Caza | 14 | 8.5% |
| Dove Canyon | 4 | 8.2% |
| Dana Point | 18 | 4.9% |
| Villa Park | 2 | 4.3% |
| Seal Beach | 7 | 3.8% |
| Corona Del Mar | 3 | 2.2% |
| Laguna Beach | 6 | 2.1% |
| Newport Beach | 9 | 1.7% |
| Newport Coast | 1 | 0.6% |
| Laguna Woods | 2 | 0.5% |
| All of O.C. | 3,059 | 17.5% |
| By price slice | Distressed | % of Inventory |
| O.C. $0-$500,000 | 1,833 | 30.1% |
| O.C. $500-750,000 | 1,052 | 17.1% |
| O.C. $750k-$1million | 154 | 6.7% |
| O.C. $1-$1.5 million | 54 | 3.6% |
| O.C. $1.5-2 million | 10 | 1.4% |
| O.C. $2-4 million | 3 | 0.4% |
| O.C. $4 million + | 0 | 0.0% |
As for the overall inventory trends, Thomas says …
“The bottom of the financial crunch, in terms of demand (escrow activity), was about a month ago. Demand, the number of homes placed into escrow within the prior month, increased from 1,113 homes four weeks ago to 1,241 homes today, that’s an increase of 128 homes, or a 12% increase. With the start to the Holiday market, it looks as if many homeowners are opting to pull their homes off of the market. The active inventory dropped by 305 homes in two weeks to 17,454 homes.
With an increase in demand and a drop in the inventory, market time (time to sell all inventory at current new escrow pace) decreased from 15.11 months two weeks ago to 14.06 months today. Last year at this time there were an additional 746 escrows within the prior month, the active inventory was at 14,729, or 2,725 fewer homes, and market time was at 7.41 months. Two years ago, there were 9,195 fewer homes on the market, 1,509 more escrows within the prior month, and the market time was at 3 months.”
November 5th, 2007 at 10:06 am
great article on why we aint nowhere near the bottom,,
sorry dimmy
http://www.signonsandiego.com/news/business/calbreath/20071104-9999-1b4dean.html
November 5th, 2007 at 10:08 am
appraisers pressured to lie who woulda thunk it
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/11/03/MN10T5DS5.DTL
November 5th, 2007 at 10:27 am
jon what is 7+4 equal to? don’t make me do addition please.
it is now 9:30am.
rants is getting lonely in here.
i think the market is going to hit bottom now.
November 5th, 2007 at 10:27 am
Interesting data. It would be nice to see it further split by Condo vs SFR. The price stratification implies that it’s more pervasive in the condo sector. This also implies an affordability problem given the the coastal & more affluent sectors have barely been impacted by this.
14 months is still too much inventory for this season. If the % of distressed properties continues to grow, 2008 may very well be the year that we see shaper price declines. It feels like many parts of the OC market has turned from spectator sellers to forced sellers over the course of this year. Forced sellers lower comps
November 5th, 2007 at 10:29 am
the resale housing market has a new competitor…
builders already adjusting their price to move inventory…
banks are adjusting prices to move inventory…
pressure to sell…
no pressure to buy…
same question…
how do realtors and sellers sell homes in the oc without creative financing?
November 5th, 2007 at 10:45 am
realitycheck is right- or at least I agree.
More inventory, more competition, more days on the market, fewer financing options means somethings got to give.
Simple economics, excess inventory equals lower pricing.
Bottom is probably not near yet because most people, including reo’s, are going to hold to as much value as they can… even if the value is not there. It may be called greed, but it is also the propaganda that has been fed to us all that the “value is there.” Apparantly it is not.
November 5th, 2007 at 10:53 am
The bottom of the financial crunch, in terms of demand.
This guy should read some of the financial papers. The Mortgage insures are ready to go belly up this week. I’m sure this will help liquidity.
Were in the early innings of the game and this guy is saying it’s over?
November 5th, 2007 at 10:54 am
Great data, thanks Jon and Mr. Thomas.
Gosh, that report made me hungry…
November 5th, 2007 at 11:09 am
FYI: prices have already dropped. If prices “stayed the same” as the dollar devalued, your home has lost value. Check what your house was worth a year ago in Canadian compared to now (hint: dollar has dropped over 10%; almost 15% vs. the Euro; .)
People make statements about the economy based on the stock market reaching new highs, but if the dollar drops the stock market MUST increase in order to break even. Same for real estate.
Sorry to add to the gloom.
November 5th, 2007 at 11:29 am
Yes, it would be nice to see these numbers split into condos and detached homes.
Sadly, the Register won’t or can’t report on the bigger condo story brewing in OC. Lennar has just announced that it has halted all sales at its Central Park West development in Irvine. That includes the high-rise luxury Astoria tower, as well as 500 other mid-rise units nearing completion across the street. Lennar has closed its Living Studio sales center for CPW, while it finishes completion on the current buildings in early ‘08, and then seals the buildings and puts the homes into mothballs to await an upturn in the market in ‘09 or ‘10 or ‘11.
And that news from Lennar comes one week after the Register was silly enough to put a picture of Central Park West in its story of how the loss of 16 (sixteen) homes in the OC wildfires may spur interest in condo sales. What exactly are they putting in the coffee makers at the Register’s office?
Lennar has also stopped construction on its bigger Platinum Triangle development in Anaheim, and has halted preparation work on its even bigger Great Park property in Irvine.
Just the recent actions and announcements by Lennar regarding its Irvine and Anaheim properties it is now shelving is huge. Nevermind similar announcements coming from other OC luxury condo developments from D.R. Horton, or few sales for those Skyline towers near South Coast Plaza. And then there’s the entire SunCal mess near Disneyland that is also imploding in on itself to Disney’s delight.
But the Register won’t or can’t report on this big story. See the front page of todays Orange County Business Journal for the for the interesting story on Lennar about their mothballed high rise towers and the halt to sales at Central Park West. That corner of Jamboree will soon look eery with mothballed high rises and abaonded luxury housing. We’re ready for that story when you are, OC Register.
November 5th, 2007 at 12:03 pm
What is inventory going to look like in August of 2008?
25,000 homes?
November 5th, 2007 at 12:06 pm
attaboy Troy. that is huge news. I work just down the street from the Central Park West development — a development premised on the sales at Marquee Park Place just across the street, sales buttressed on flippers and bubble buyers. What the OC Register should do is revisit their Marquee Park Place article, which starred some twenty yr old “broker” crowing about his killer investment there. Now look at you all: Lennar has turned on the lights exposing all you naked folk! Oops, but Lennar is just as naked.
The whole idea of an “urban” lifestyle at the corner of Jamboree and Michelson kills me. Try walking around here, this ain’t Manhattan.
I wonder what this means for the “Great Park.” Irvine should have held off buying that balloon.
November 5th, 2007 at 12:14 pm
shame on the realtors, if it hits 25,000 homes for sale…
while they wait for creative financing to return… people will continue to lose their homes.
face the facts… creative financing is gone and will not return.
still affordability…
November 5th, 2007 at 12:19 pm
My guess is that the residents of the wealthier areas are looking at these tables and thinking…..good this problem will not hurt my home values……good thing I purchased in a desirable area. We will not know if this is the case or not for another year or two. My hunch is that as time goes on we will find that all areas of OC were impacted by the housing bubble and that there will be distressed properties in all demographic and economic areas……poor to rich……… Santa Anna to Newport Coast.
November 5th, 2007 at 12:26 pm
realitycheck,
I agree….. i think we might be seeing realtors chase the bottom….. by not decreasing prices faster they might actually be hurting their clients
November 5th, 2007 at 12:33 pm
The bottom fill out yet Sun-Cal and the City of Anaheim still want to build slum housing next to Disneyland and Anaheim stadium. LOL
November 5th, 2007 at 1:19 pm
Here is the bottom
http://www.irvinehousingblog.com/wp-content/uploads/2007/10/california-valuations.pdf
November 5th, 2007 at 1:22 pm
——————————————————
COMMENT #25,000
THANK YOU, BULLS & BEARS !!!
Jon
——————————————————
NanoWest Says:
November 5th, 2007 at 12:19 pm
My hunch is that as time goes on we will find that all areas of OC were impacted by the housing bubble and that there will be distressed properties in all demographic and economic areas……poor to rich……… Santa Anna to Newport Coast.
Nano West your hunch is correct. The way it works is that there are roughly two types who are in trouble with their mortgage at this point:
The first group are the folks who had minimal savings, income and credit, just managing to qualify under “aggressive” mortgage financing - they fell immediately since their little remaining credit was most likely exhausted with the few new items of furniture they purchased right after closing.
The second group also stretched into aggressive mortgages, but they are “professionals” with savings, 401Ks and non-real estate credit lines which are right now being rapidly being drawn down each month to stave off public humiliation. (don’t for get to multiply the drawdown rate by the number of investment condos they purchased).
When the reality of how just long it will take for prices to “recover” those folks will stop wiping out their credit (and kids’ college funds), quit the cocktail party chatter about those “stupid subprime borrowers” and quickly point out that bankruptcy is a “respectable financial option in the modern economy.”
Don’t worry, NanoWest this one will drag on long enough for everyone’s dirty laundry to get exposed.
November 5th, 2007 at 1:26 pm
sidewatcher,
you are sort of funny and disturbing at the same time…. nice work
November 5th, 2007 at 1:29 pm
ada boy troy pretty sad when we have to get news info
like that from a blogger instead of in the local newspaper
watch ben stein- “investment expert” stick his foot in his
big mouth by tauting merrill lynch stock as a “bargain”
at 76 dollars- this was in august just a couple months ago-
merrill has dropped 30% in that short period of time- please
note how he mocks peter schiff who says that stock is
“toxic”– reminds me of the bulls on this blog so clueless
as to whats happening in the real world its downright scary
http://www.europac.net/Schiff-FOX-8-18-07_lg.asp
November 5th, 2007 at 1:34 pm
Could have we put a more negative title on this article?
How about this title: Newport, CDM, Laguna Beach don’t have any distressed home problem.
November 5th, 2007 at 1:49 pm
YET…Jimmy….yet.
November 5th, 2007 at 1:52 pm
Hey Jimmy,
Let the bears have their blog It is written by and for extreme bubbleheads. By posting here you are actually perpetuating their philosophy and talking points.I don;t know if you have noticed but the tide is slowiy, ever so slowly, changing to a more stable market. We are obviouly not there yet but light is at the end the tunnel. Why waste your time posting here and giving bubbleheads energy and credibility. Its a worthless use of your time
November 5th, 2007 at 2:14 pm
Jimmy,
right now 2.2% of inventory distressed…….
lets look at sells volume though… rather than the large inventory
how many homes are selling in CDM per month these days?…… 20 homes or so per month?
3 homes in distress……
November 5th, 2007 at 2:24 pm
Does anyone know where to find the results of the auctions conducted by REDC or Hudson and Marshall for SoCal? I don’t like waiting for it to record and don’t have time to attend.
November 5th, 2007 at 2:25 pm
it’s not just the number of distressed sales on the market in Santa Ana and Anaheim, but it’s the fact that there are so few sales that is distressing.
Per MLS, in Santa Ana, there are about 1,644 homes and condos on the market. During the month of October approx. there were 33 closed sales which works out to about a 49 month supply of homes available for sale. Anaheim with an approx. 25 month supply isn’t much better off.
And as to the Marquee Park Place, per MLS there are 40 units for sale, 1 currently pending sale and no closed sales in the past two months. Can inventory be infinite??? (40 / 0 sales lol).
November 5th, 2007 at 2:27 pm
that is the problem…
realtors do not want to discuss this topic… they think the problem is not theirs to resolve…
or it does affect the neighborhood that they live…
when creative financing was available… all a realtor needed to do was to open the front door and the house was sold.
maybe raise the commission to 10% and the realtors will work a little harder..
when the going gets tough… blame the buyer…
November 5th, 2007 at 2:29 pm
Is it just me or this blog full of extremist: those who either claim the world is ending (e.g Nanowest & Slidewatcher, are you kidding?) or those who totally ignore realty? House prices are falling and will likely continue to fall, less so on the coast. It is unlikely that they will fall 40, 50%+ from current levels and if they do so, housing prices will be the least of our concerns.
On the other hand, you cannot ignore trends in increasing inventory, dlinquency/foreclosure rates, declining affordability, higher unemployment, and the risk of an impending recession. Price declines have traditionally occurred over the course of several years. It would be nice to see more objective discussion here.
November 5th, 2007 at 2:35 pm
The bottom is here, most that are posting here are just upset they missed out in 2001 and can’t afford anything decent in OC.
There is plenty of affordable mortgages out there with 10% down, average credit scores, with some proven, some stated income, with rates
November 5th, 2007 at 2:39 pm
Here is the Lennar article that was discussed above:
http://www.ocbj.com/weekly_article.asp?aID=5371999.4228024.1549275.3076848.7286602.676&aID2=119166
November 5th, 2007 at 2:41 pm
Sick_Of_Bears,
when did you buy?
It’s nice to see some bulls posting.
so you think inventory will be lower in August 2008?
the subprime mess won’t peak next summer?
November 5th, 2007 at 2:52 pm
check out this story from realtormagazineonline…
realtor.org…
“In a nationwide survey released earlier this year, 90 percent of 1,200 appraisers say they had felt “uncomfortable pressure” to adjust property values. Mortgage brokers were named as the most common culprits, followed by real estate practitioners, consumers, lenders and appraisal management companies. The increase in pressure was dramatic compared with that found in a similar survey in 2003, when 55 percent of appraisers reported feeling pressured.”
http://www.realtor.org/rmodaily.nsf/pages/News2007110502
keep blaming the buyer…
November 5th, 2007 at 2:54 pm
Some of my post got eaten.
The point is that so-called creative mortgages are here to stay, at least in OC. If you want to buy then be prepared to pay 10 times your income and use a “non-traditional” mortgage. That’s how the game is played now.
All of this longing for the good old days of proven income, asset verification, and 20% down are long gone. Live with it or rent. Those are your two choices.
Subprime will affect the loser areas that no one here would ever want to live in. If you want to take advantage of the subprime mess go to the Inland Empire, Las Vegas, or Bakersfield. Otherwise deal with the fact that OC costs more now, and will forever.
With all of this doom and gloom existing SFR prices (not builder’s fire sales) in areas where decent people would want to live, has gone down 5% at most. Yes the gang infested areas have declined, what did you expect!
November 5th, 2007 at 2:54 pm
here is Lennar’s spin straight out the OC Biz Journal:
Central Park West’s location and unique design should command premium prices, Haddad said. Four of the six home types being built at the project, including the high-rises, have starting prices near or above $1 million. Two other home plans start in the $700,000s, according to Irvine-based Hanley Wood Market Intelligence.
“For that location, the last thing we want to do is engage in a sale program that (emphasizes) heavy discounting,” Haddad said.
This is hilarious: Lennar is engaging in the same shenanigans as the investment banks: just as the banks would rather not admit to horrific losses so that they continue to represent their mortgage-backed debt as sound so does Lennar continue to dream that their folly in developing Central Park West based upon trees-will-grow-to-the-sky flipper prices paid at Marquee Park Place will one day be solved by some sort of market turnaround: as if this market could ever turn back to 750K for smallish apartments gussied up with granite counters: talk about lipstick on a pig!
I suppose that after sufficient debasement of our currency, one day these 2-bedroom closets will be worth 750K, but that will not save Lennar from colossal losses: they financed this deal with current dollars, not in-the-year-2017 dollars. Koolaid drinkers are at all levels in this society.
November 5th, 2007 at 2:55 pm
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November 5th, 2007 at 2:56 pm
AsIseeit,
One of your points of view that I don’t understand is why you think anyone would care if home prices went down 50 % in orange county….who cares? Your statement ………..”housing prices will be the least of our concerns”………………..baffles me. Housing prices falling 50% would mean a reversal of 3 or 4 years of application, why would this be a problem for anyone? For some reason I get the idea that you think the financial world is centered around orange county home values.
I do feel sorry for the professionals such as real estate agents, mortgage brokers, title companies and other real estate related industries that have substantially reduced incomes. However, most of these professionals are very smart and must of known that the bubble would burst at some point. I am sure that they saved a lot of money to get through the tough times that occur when a market slows down.
Such a revaluation of market value would have zero impact on me or for that matter anyone that purchased before 2002. For those that purchased after 2002 then it is only a problem if they can’t afford their mortgage or they have to sell their home. No big deal here.
November 5th, 2007 at 3:01 pm
creative financing…
fool me once… shame on me.
fool me twice… shame on you.
wallstreet and the banks are not supporting it…
maybe the realtors can start putting their own money up… its easy to spend someone elses money…
November 5th, 2007 at 3:02 pm
Sick_of_Bears,
where are you getting your credit information?
You are seeing people get loans 10 times their income?
are you sure that is even possible?
November 5th, 2007 at 3:14 pm
Yes people are making purchases like this every day in OC. Go call any mortgage broker. Lenders have had to adjust to the fact that this isn’t Arkansas. People around here make it sound like you call for a mortgage nowadays and the person on the other end of the phone says, “Sorry, morgages are not avaialble anymore, you must pay cash”. Give me a break. Are the 100% LTV liar loans gone, yes they are. Lenders realize that NO ONE in OC can afford to put down 20% on a decent house. The lenders have had to adjust to the new reality. Things are never going back to the “good old days” of 80/20 proven income loans, never!
Educate yourself, don’t listen to the bears around here.
November 5th, 2007 at 3:14 pm
“Lennar has just announced that it has halted all sales at its Central Park West development in Irvine. That includes the high-rise luxury Astoria tower, as well as 500 other mid-rise units nearing completion across the street. Lennar has closed its Living Studio sales center for CPW, while it finishes completion on the current buildings in early ‘08, and then seals the buildings and puts the homes into mothballs to await an upturn in the market in ‘09 or ‘10 or ‘11. ”
Now that is very interesting news. One wonders what the objective is. It may not be all that stupid of a move, for a few reasons:
1) If Lennar dumps these properties now there is the potential that it will show up on their balance sheet as loss, which they deffinitely do not want - moving that loss to other quarters may help moderate short term effects to the company’s market position.
2) Dumping these units into an environment where inventory is already bloated will only put further downward pressure on prices, and I think it is a fair bet that Lennar does not want to do that. I would not be surprised to see other builders doing this same exact thing… because they will all be furiously doing the math on the carrying cost of these properties vs. the probable costs associated with liquidation of this excess inventory. They may just decide that carrying cost is lower, especially if they expect to see a rebound soon. In fact, they may be doing this to try and spark a rebound, especially if they believe, as many of these guys seem to, that this is all just bad attitude and there is no real structural reason behind the market conditions right now. If a Jimmy were sitting on 1000 homes he could not sell for some reason… I would not be surprised to see this kind of move. After all, in that market view, the market CAN absorb these units… it just doesn’t want to for some reason. Dropping supply to increase demand pressure and hold up prices is not something too far fetched for that kind of mindset.
3) Lennar could also be banking on erosion to the dollar and ensuing monetary inflation… in which case the real dollar denominated debt cost of these properties will be much lower in 2010 or so than they are today.
That’s an interesting move I totally did not expect.
November 5th, 2007 at 3:15 pm
Sick_of_bears does not understand what it means when the CEO of Citibank gets fired for losing billions of dollars as a result of mortgage investments. He does not understand what it means when the CEO of Merrill Lynch gets fired for losing billions of dollars in mortgage related assets.
Sick_of_bears…….what this means is that wall street does not think that homes are worth as much as people were paying for them. Wall street is preparing to lose more and more money over the next year or so…………..this means that loans are drying up….its actually pretty simple to understand.
November 5th, 2007 at 3:20 pm
The Fed is giving the banks and Countrywide plenty of money ($41 billion last month) to keep making loans. No Wall Street money necessary.
November 5th, 2007 at 3:24 pm
listen to the realtor… who stears the buyer to a creative finance package… who instructs the appraiser to overvalue the home…
commission earned…
the buyer… who cares… what happens to them…
creative financing… a good deal for the realtor…
that’s all they got…
November 5th, 2007 at 3:25 pm
Sick_of_Bears,
August 2008 is going to be ugly.
I hope you bought in 2001 and not 2004…… if you bought in 2005 / 2006 you should not even be posting here.
November 5th, 2007 at 3:27 pm
“no wallstreet money necessary”
again spending someone elses money… the taxpayers…
November 5th, 2007 at 3:32 pm
Shiny said: “I suppose that after sufficient debasement of our currency, one day these 2-bedroom closets will be worth 750K, but that will not save Lennar from colossal losses: they financed this deal with current dollars, not in-the-year-2017 dollars. Koolaid drinkers are at all levels in this society.”
Not that I am a fan of currency debasement, Shiny, but I think you are incorrect here. You assume that devaluation of currency happens in a static fashion with no follow-on effects. But that’s not typically true. What typically happens is that davalued currency = more currency in circulation = inflation in consumer and asset prices . The end result is that a dollar denominated debt of $60000 (price of a house in 1985) winds up being the same debt in 2007… but $60000 in 2007 is trivial. The debt doesn’t change, but inflation alters the current debt burden dramatically.
If, and I am being hypothetical here… IF someone were to expect an inflationary episode and perhaps a concommitant weakening of the dollar… then holding a debt and liquidating it later is not really all that dumb.
To illustrate a different way: I make a heck of a lot more money today than I did 10 years ago. Oddly, it really doesn’t go all that much further thanks to inflation… but that $4000 debt. I had from 1997 is sure not much in terms of percentage of my total income now. Heck, if I were a business and I chose to maybe write that debt off… it would be nary more than a blip on my balance sheet.
November 5th, 2007 at 3:37 pm
Put yet another way, Lennar is choosing to be long with their holdings, assuming that the cost to carry the liability and elliminate it later will be less than the cost associated with doing so today. And for a lot of potential economic scenarios, they could be right.
November 5th, 2007 at 3:43 pm
I understand you are all upset. I may not agree with what is happening, but it is the truth. The Fed will do whatever it takes to prop up home values. If that means printing money and giving it to Countrywide or lowering inter