[quote=Arraya]So you are saying if we released 40,000 homes to the SD market it would be cleared up in a few months with just a little dip. Now I have not followed local RE numbers in about 2 years, but I seem to remember that being a little more that a few months supply
Coupled with an anemic job market I think you may be down playing the severity of the correction.[/quote]
Arraya, are you SURE there are 40,000 properties in SD County where a NOS has been filed and a sale on the courthouse steps is imminent?
Are you sure you’re not counting squatters where no NOD was ever filed, perpetually postponed filings of NOS or postponed foreclosure sales where a sale was delayed (perhaps due to a BK filing)?
I think it’s more like 10,000-15,000 and that would be spread out over multiple zips with some zips getting the lion’s share. Since a non-judicial foreclosure has a predictable cycle (exc. for a “20-30 day blip” to release the stay in the case of a BK filing), if the lenders exercised their timely right here, the REOs would appear on the market in waves and most would be quickly snapped up by buyers that don’t necessarily need a “job” to acquire these properties. You might want to ask a Pigg that lists REOs for lenders but IMO, in the better areas, trustees deeds and REOs are purchased with cash and rehabbed with cash. Some of the buyers are or have relatives that are . . . general contractors. I don’t know what the percentage is that buy distressed property with all cash, but would guess it’s >30%.
Another big chunk of distressed-property buyers may have >20% downpayment. A lower-income or self-employed loan applicant might not be as scrutinized by a lender if they are making a substantial downpayment combined with purchasing a property in a good area at a “distressed” price.
All downward or upward pressure on prices is a “micro” phenomenon, esp. in CA. In other words, if one-quarter of Otay Ranch residents were evicted in the next 30 days, this would have no bearing on Coronado housing prices.
Yes, I agree that your global “downward projection” could occur and cause a lot of pain in heavily overbuilt markets such as Florida, Arizona and Nevada or even inland CA, if several thousand REO’s were dumped on a particular metro market at once. Not so in CA “coastal communities,” i.e. < 5 mi. from the coast.
I don't see the high unemployment rate here as a deterrent to anyone who wants to sweep up some REO's to fix up for family or rentals. Most potential buyers who work 40+ hr. weeks and/or have a lot of child-related duties DO NOT want to buy an REO unless they are relatively modernized because most need more work than they can physically or financially manage.
In other words, most of the REO buyers are different animals than your garden-variety working parent and child(ren) family.
