REO MARKET WATCH – October ’09

Housing sales and prices seem to be up everywhere and the new numbers back it up. We may finally be near the “bottom” of the long decline in values.

For the past three months we have been experiencing a slight firming in the real estate market. A few of us have been holding our breath praying that it might be turning around. The big question has been how close are we? Well, it looks like we are very close. For six months in a row – the longest consecutive up tick since 2001 -  sales are up and prices have increased indicating that some areas may have already bottomed out. 

Investors are jumping in worried that they might miss the bottom of the market driving up prices and fueling speculation of a possible recovery as early as next spring.. According to Clear Capital’s Home Data Index, housing prices through August are up 7.3% nationally – Breaking it down by region: the Northeast was up 5.4%; the Southern region was up 5.7%; the West was up 3% and the Midwest was up a whopping 16.4%! Across the board housing prices increased in 28 of 30 markets surveyed.

Markets like Dallas/Ft Worth continue to improve, but some of the dicier areas like Miami/Ft Lauderdale, Orlando, Houston, Los Angeles, Fresno,Riverside, San Bernadino, Phoenix, Cleveland, Columbus and Chicago have all experienced higher sales prices in spite of consumer confidence dropping to 1.4% during the same period. Chicago just posted it’s first quarterly gain in three years – increasing over 19%, almost wiping out the total losses incurred last winter.

And the REO saturation is declining. Nationally, REO sales accounted for less than one third of all closings – down 11% – as foreclosure sales continue to decline. Even in the REO saturated West REO sales accounted for just over 41% – down 3.4%. Although another wave of REO is anticipated prior to years end the increase in distress sales is lessening their impact on the market as more and more borrowers are proactively disposing of their properties before foreclosure.

Interest rates for thirty year fixed loans have dropped below 5%. Loan applications are up 15% versus this time last year – FHA applications are up an incredible 52% as homebuyers flock to beat the window for the $8,000 tax credit.  Realtors in California are reporting multiple offers – many above the asking price – for the first time in three years. West Coast Bancorp, Inc. CEO, Ralph San Roman, told me that, “There seems to be a new excitement or energy in the marketplace – especially in the under $700k properties. A client stopped by this morning to tell me that he put a renovated Orange County property on the market last week and sold it the next day”. He said local realtors are complaining about having plenty of buyers, but not enough product and it has been a long time since he has heard that.

Are we there yet? I’ve got my rabbit’s foot in my pocket, my lucky socks on and a crystal pendant around my neck. All my fingers are crossed and I’m stepping over every crack in the sidewalk. I’ve still got my sign up and I’m hoping……