What's New at Moore Appraisals

La Jolla, CA---Southern California home sales outpaced last year for the fifth consecutive month in November, when 55 percent of buyers in the resale market chose repossessed homes. The abundance of discounted foreclosures helped push the median sale price down a record 35 percent from a year ago, a real estate information service reported.

A total of 16,720 new and resale houses and condos closed escrow in the six-county Southland last month. That was down 22.3 percent from 21,532 in October but up 26.9 percent from 13,173 in November 2007, according to San Diego-based MDA DataQuick.

On the surface, last month's sales look much weaker than in the prior two months: November's 26.9 percent year-over-year sales increase compares with annual gains of 64.6 percent in September and 66.7 percent in October. Moreover, the 22.3 percent drop in sales between October and November was a record and compares with an average October-to-November decline of just 7.4 percent since 1988, when DataQuick's statistics begin.

But November also had an unusually low number of business days when transactions could be recorded. Most counties had 17 business days last month, compared with 22 in October and at least 19 in most Novembers over the past 20 years. In most counties, the Thanksgiving and Veterans Day holidays resulted in three fewer business days last month, plus this November started and ended on a weekend.

Last month appears stronger when viewed this way: Its average number of transactions recorded daily was only about 1 percent lower than the daily average in October, which had the highest number of sales for any month so far this year.

"Bargains and bargain hunters have kept this market alive through some of the bleakest financial news in memory. There's this renewed sense that you can score a 'deal' - something that had been missing for many years. Last month's Southland sales weren't great, given they were the second-lowest for any November in 16 years. But they could have been a lot worse," said John Walsh, DataQuick president.

"Many first-time homebuyers are, understandably, cheering as foreclosures dominate sales, tugging down prices and raising affordability," he continued. "For home sellers and the industry, though, one concern over foreclosures representing half of all sales is that those transactions simply repay lenders. They don't trigger a move-up purchase."

Orange County’s not alone in SoCal in seeing a big homebuying rebound from September 2007. DataQuick reports …

• Sales in the 6-county SoCal region shot up an “unprecedented” 65% in a year. Last month’s sales were the highest for any month since December 2006.
• Yet, last month was the second-lowest September since 1996 and 17% below the 20-year sales average.
• 50% of all existing homes that closed escrow in September had been foreclosed on at some point in the prior year vs. 45.5% in August and 12.6% in September ‘07.
• Orange County (36.8%) had the fewest foreclosure-linked sales; then LA (39.1%); Ventura (44%); San Diego (47.3%); San Bernardino (63.1%) and Riverside at 68.9%. percent in Riverside County.
• Foreclosures helped push SoCal’s median selling price down to $308,500, lowest since May 2003 and 39% below peak $505,000 reached in spring and summer of ‘07.
• “The pitifully low September 2007 sales numbers weren’t tough to beat. More impressive was that this September’s sales volume bucked the seasonal norm and rose above August,” said John Walsh, MDA DataQuick president. But he noted: “Over the next few weeks our sales data will begin to show how the meltdown in financial markets this fall has impacted housing demand.”

Banks last month took 633 homes in Orange County from delinquent borrowers, a 14% drop from October and the lowest monthly foreclosure total in a year.

Still, foreclosures were up 74% from 364 homes taken in November ‘07. Of course, last month’s total was close to the peak at the end of the slump in the ’90s: 674 foreclosures in October ‘96.

However, notices of default, which start the foreclosure process, increased roughly 30% to 1,205 last month from October.

Notices of default plummeted in September — rising slightly in October — as a state law was enacted requiring banks to talk with borrowers at least 30 days before filing an NOD (or show they tried) and discuss options to avoid foreclosure.

Some experts say the law temporarily lowered NODs first and is now doing so to foreclosures. Also, some recent reports show lenders and loan servicers are modifying more loans to help borrowers avoid foreclosure. But loan mods are occurring on a small percentage of all delinquent loans — around 3% monthly by some estimates. (*Word “monthly” added.)

Meanwhile, Orange County’s median home price fell to a 66-month low of $400,000. Read more on prices and sales HERE.

Here’s a table with notices of default (NODs) and foreclosures (Forec.) by month going back to 2006:

California home prices were falling at a 28.85% annual rate in late October, worst decline in the nation, reports First American LoanPerformance. It’s the 18th consecutive month that California has taken that dubious honor.

Following California was Nevada (-24.54%); Arizona (-20.41%); Florida (-16.12%); Rhode Island (-13.30%) and  Hawaii (-12.69%.) Best in the nation was West Virginia, up 4.96%.

One glimmer of hope for Californians was that late October’s rate of decline was down for the second straight month, leaving the loss rate at its lowest since May.