Pacific Beach Question

[jonnycsd]

Watching the real estate implosion progress I see the following stats for my own ZIP Code, 92109 (homes and condos). Am I reading this right?

Realtytrac.com shows
476 homes in pre-foreclosures (NODs)
119 homes at auction
415 homes owned by the bank
——
1010 “involved” homes total

As best I can determine, about 100 homes a month have been entering this pipeline via 92109 NODs.

According to http://rereport.com/sdccsd/ 92109 has an average of about 25 home sales a month for the last three months, and about 35 a month over the last year. (again, this is SFR and Condos combined)

Figure that at MOST 40% of the NODs are corrected without some type of sale (short, auction or other) then we are currently seeing about 2.5 years of 92109 inventory sitting in the banks’ hands alone. And is it is rapidly growing.

Are the banks really going to try to auction all of this inventory at market clearing prices? Into a market where financing has become extremely difficult? Are there enough “Piggingtons” out there to soak up all this forced supply? I don’t think there are, not even at 50% discounts. Who is going to buy 1,000 Pacific Beach homes at auction in 2008? What happens to the value of collateral that is not in foreclosure if the banks auction off 1000 homes in 92109 during the first half of 2008?

It seems the banks are in the process of shooting themselves in the foot – if not outright amputating their own legs above the kneecap – with a 12 gauge shotgun.

Given these developments it almost makes sense for ANY PERSON who has a recent (say, last 4 years) purchase money mortgage in PB to walk away. There may be some exceptions – like oceanfront, but the rest . . .

What am I missing?

[Doofrat]

I agree that it makes sense to walk away for many people, but a lot of people are hoping beyond hope that the market will pick back up this year or next. Walking away is probably a tough step to take psychologically, so it’s not just a decision based on numbers and logic. You don’t have to drive through many neighborhoods very long before you see a bank owned sign, and this will probably feed on itself as people become desensitized to it and see it as an actual option.
I’m not surprised that the bubble burst, but I’ve got to admit that I’m shocked by how fast it turned around and by how many foreclosures there are out there.

[Doofrat]

I agree that it makes sense to walk away for many people, but a lot of people are hoping beyond hope that the market will pick back up this year or next. Walking away is probably a tough step to take psychologically, so it’s not just a decision based on numbers and logic. You don’t have to drive through many neighborhoods very long before you see a bank owned sign, and this will probably feed on itself as people become desensitized to it and see it as an actual option.
I’m not surprised that the bubble burst, but I’ve got to admit that I’m shocked by how fast it turned around and by how many foreclosures there are out there.

[Doofrat]

I agree that it makes sense to walk away for many people, but a lot of people are hoping beyond hope that the market will pick back up this year or next. Walking away is probably a tough step to take psychologically, so it’s not just a decision based on numbers and logic. You don’t have to drive through many neighborhoods very long before you see a bank owned sign, and this will probably feed on itself as people become desensitized to it and see it as an actual option.
I’m not surprised that the bubble burst, but I’ve got to admit that I’m shocked by how fast it turned around and by how many foreclosures there are out there.

[Doofrat]

I agree that it makes sense to walk away for many people, but a lot of people are hoping beyond hope that the market will pick back up this year or next. Walking away is probably a tough step to take psychologically, so it’s not just a decision based on numbers and logic. You don’t have to drive through many neighborhoods very long before you see a bank owned sign, and this will probably feed on itself as people become desensitized to it and see it as an actual option.
I’m not surprised that the bubble burst, but I’ve got to admit that I’m shocked by how fast it turned around and by how many foreclosures there are out there.

[Doofrat]

I agree that it makes sense to walk away for many people, but a lot of people are hoping beyond hope that the market will pick back up this year or next. Walking away is probably a tough step to take psychologically, so it’s not just a decision based on numbers and logic. You don’t have to drive through many neighborhoods very long before you see a bank owned sign, and this will probably feed on itself as people become desensitized to it and see it as an actual option.
I’m not surprised that the bubble burst, but I’ve got to admit that I’m shocked by how fast it turned around and by how many foreclosures there are out there.

[kewp]

What am I missing?

Two things.

One, panic hasn’t set in yet. Thats probably at least a year away, if not more.

Two, the banks are in a mexican standoff. They are all sitting on their repos instead of dumping them, as once they blow the comps its lowers the value of the rest or their (and everyone elses) properties. At some point you will see what happened in Temecula happen here, a 60-70% off peak sale in a zipcode and then all hell breaks loose.

There are plenty of investors and buyers waiting in the wings to purchase SD RE at firesale prices, but they aren’t going to move until there is a clear bottom. I read recently that there are hedge funds itching to invest in distressed assets; so the quicker prices correct the better.

[kewp]

What am I missing?

Two things.

One, panic hasn’t set in yet. Thats probably at least a year away, if not more.

Two, the banks are in a mexican standoff. They are all sitting on their repos instead of dumping them, as once they blow the comps its lowers the value of the rest or their (and everyone elses) properties. At some point you will see what happened in Temecula happen here, a 60-70% off peak sale in a zipcode and then all hell breaks loose.

There are plenty of investors and buyers waiting in the wings to purchase SD RE at firesale prices, but they aren’t going to move until there is a clear bottom. I read recently that there are hedge funds itching to invest in distressed assets; so the quicker prices correct the better.

[kewp]

What am I missing?

Two things.

One, panic hasn’t set in yet. Thats probably at least a year away, if not more.

Two, the banks are in a mexican standoff. They are all sitting on their repos instead of dumping them, as once they blow the comps its lowers the value of the rest or their (and everyone elses) properties. At some point you will see what happened in Temecula happen here, a 60-70% off peak sale in a zipcode and then all hell breaks loose.

There are plenty of investors and buyers waiting in the wings to purchase SD RE at firesale prices, but they aren’t going to move until there is a clear bottom. I read recently that there are hedge funds itching to invest in distressed assets; so the quicker prices correct the better.

[kewp]

What am I missing?

Two things.

One, panic hasn’t set in yet. Thats probably at least a year away, if not more.

Two, the banks are in a mexican standoff. They are all sitting on their repos instead of dumping them, as once they blow the comps its lowers the value of the rest or their (and everyone elses) properties. At some point you will see what happened in Temecula happen here, a 60-70% off peak sale in a zipcode and then all hell breaks loose.

There are plenty of investors and buyers waiting in the wings to purchase SD RE at firesale prices, but they aren’t going to move until there is a clear bottom. I read recently that there are hedge funds itching to invest in distressed assets; so the quicker prices correct the better.

[kewp]

What am I missing?

Two things.

One, panic hasn’t set in yet. Thats probably at least a year away, if not more.

Two, the banks are in a mexican standoff. They are all sitting on their repos instead of dumping them, as once they blow the comps its lowers the value of the rest or their (and everyone elses) properties. At some point you will see what happened in Temecula happen here, a 60-70% off peak sale in a zipcode and then all hell breaks loose.

There are plenty of investors and buyers waiting in the wings to purchase SD RE at firesale prices, but they aren’t going to move until there is a clear bottom. I read recently that there are hedge funds itching to invest in distressed assets; so the quicker prices correct the better.

[jonnycsd]

A Mexican stand off – that makes sense and would explain why there is so much REO in 92109. From the other postings it looks like the exact dynamic you propose has now started in Mira Mesa:

http://piggington.com/1st_2001_price_in_mira_mesa

Any view regarding the tipping point allowing the first major off-peak sale to occur? What causes the REO manager at a bank to green light such a sale? What causes them to wait and let it build? Seems to be major first mover advantage if you know that sooner or later someone is going to acquiesce.

[jonnycsd]

A Mexican stand off – that makes sense and would explain why there is so much REO in 92109. From the other postings it looks like the exact dynamic you propose has now started in Mira Mesa:

http://piggington.com/1st_2001_price_in_mira_mesa

Any view regarding the tipping point allowing the first major off-peak sale to occur? What causes the REO manager at a bank to green light such a sale? What causes them to wait and let it build? Seems to be major first mover advantage if you know that sooner or later someone is going to acquiesce.

[jonnycsd]

A Mexican stand off – that makes sense and would explain why there is so much REO in 92109. From the other postings it looks like the exact dynamic you propose has now started in Mira Mesa:

http://piggington.com/1st_2001_price_in_mira_mesa

Any view regarding the tipping point allowing the first major off-peak sale to occur? What causes the REO manager at a bank to green light such a sale? What causes them to wait and let it build? Seems to be major first mover advantage if you know that sooner or later someone is going to acquiesce.

[jonnycsd]

A Mexican stand off – that makes sense and would explain why there is so much REO in 92109. From the other postings it looks like the exact dynamic you propose has now started in Mira Mesa:

http://piggington.com/1st_2001_price_in_mira_mesa

Any view regarding the tipping point allowing the first major off-peak sale to occur? What causes the REO manager at a bank to green light such a sale? What causes them to wait and let it build? Seems to be major first mover advantage if you know that sooner or later someone is going to acquiesce.

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