Craigslist Trolling

(Normally I don't do this, but I couldn't help myself.) One outgrowth of the credit crisis is the need for house-poor mortgage debtors to raise cash quickly. What better way than to sell those toys they bought so easily with their HELOC in 2005? Here are just a few examples:

new suede couch and love seat for sale - $1500: "I Just need to get rid of them as money is tight right now and my house payment is more important."

Newer 2006 Honda CRF250X in TOP CONDITION: "My mortgage is going up and I need to sell my bike... My asking price is pretty firm due to its new condition."

1968 Camaro - $5000: "Definitely a fixer. I have spent way too much money and I have a mortgage. I am firm on the price."

2001 jeep grand cherokee TAKE OVER PAYMENTS - $282: "must sell, have new mortgage, 11 month old and baby on the way, can't afford the payments, MUST FIND SOMEONE TO TAKE OVER, ASAP"

2006 HARLEY DAVIDSON: "I AM SELLING MY 2006 HARLEY DAVIDSON FATBOY.DUE 2 MORTGAGE ISSUES."

Mercedes Benz 190e loaded very clean $2799 obo: "Need to pay my mortgage. SERIOUS CALLERS ONLY PLEASE I REALLY NEED TO SELL ASAP."

2006 Lexus IS350 - $33450: "I love this car but must sell - mortgage industry casualty!"

And the saddest ones of all:

We are looking for FREE firewood...: "
We are looking for firewood. Due to our $2700 month mortgage, cannot afford to buy any, much less the 1000 electric bill.....BUT... We can come get it!! :)"

Beautiful burial plot location at Valley Memorial Park - $3000: "I am selling this for $3000 obo due to the fact that I must pay my mortgage."

Sacramento Regional Real Estate Trends for November 24, 2007

The year-end is fully upon the real-estate market in Sacramento, with all the indicators either at or past their peaks for the year. Even the sellers in trouble indicators seem to have topped out, including raw inventory, percent of market, and dollar amount:





About the only thing that hasn't topped is average SIT percent loss:


SIT condition aside, the year-end impact is most evident on the weekly change and four-county inventory data. Guess the Realtors are too focused on the CanTree to do any new listings. :)

Sacramento Regional Real Estate Trends for November 17, 2007

Too much going on, so just the graphs this week. I'll try and pop in for a comment or two if time permits.

Tanta vs. Aaron Krowne vs. Gretchen Morgenson

Since this is bound to be a slow news period, here's an entertaining story I've been watching for the last couple of days. If you're in a philosophical mood, have a couple of hours to spare, and enjoy learning about the minutiae of the foreclosure process, pour your self a cup of coffee and check out these links.

The story begins on iamfacingforeclosure.com. Many of you will remember that URL as belonging to a well-known house flipper turned investment guru turned bankrupt divorcee. Well, no longer. As of a few months ago, the URL was purchased by Aaron Krowne, the proprietor of the Mortgage Lender Implode-o-Meter. Earlier this week, he ran a story with the not-inflammatory-at-all title of:

Deutsche Bank Foreclosures Tossed Out of Ohio Federal Court - "They Own Nothing!"

As you can imagine, this story generated much interest in the Bubblesphere. I, for one, smelled a rat, but not understanding much about the foreclosure process (or how it relates to securitization), I had no way of parsing the information. Apparently, a lot of other people had the same problem. And when an issue like this occurs, there is only one person to turn to: Tanta on Calculated Risk.

After several pestering comments from the likes of me and several others (which she patiently answered), Tanta formerly weighed in on the issue in classic fashion:

Deutsche Bank FC Problems and Revenge of the Nerd
In Re Foreclosure Cases

You might have thought that would put the subject to bed. You would have been mistaken. Just this morning, this article appeared in the New York Times:

Foreclosures Hit a Snag for Lenders

Adding to the drama, NY Times reported Gretchen Morgenson neglected to credit Aaron Krowne for breaking the story! The response from Tanta was swift:

GM Watch: The Flap Continues

That's where the story stands as of this morning. I'll post any updates as they come in.

**Update**

Aaron Krowne and his fellow blogger Moe Bedard have posted a rebuttal to Tantas argument. Also, another similar ruling has been made by a different federal court in Ohio:

The Judicial Integrity of the United States Court is "Priceless" – 27 More Foreclosures Dismissed

True Sale, False Securitizations

**Update #2**

Gretchen Morgenson as published a much-dialed-back article on the additional Ohio foreclosures. I wonder if Tanta scared her off her assumptions just a little:

Judge Demands Documentation in Foreclosures

MLS vs Assessor Sales

The following is a comparison of monthly sales data. The red line is from Agent Bubble (MLS), and the orange line is taken from the date the sale was recorded by the county:

(County data for October is not available yet.) As you can see, there a lot of fluctuation month-over-month in each data set, and I wouldn't call a 5% change in either direction very significant.

FYI: the county data really is that noisy. I think all the staff took vacation in December 2005. :) Does anyone have any insight into how the assessor assigns a date to the transaction?

October Sales Stats

A small surprise for October's sales data...Sales increased when compared to the previous month by about 5% and were down 26% from the same month last year. I looked at the data and couldn't find any strong signs to suggest increased new home sales or anything like that to contribute to the rise. We had a similar increase from September to October in 2006. The next 3 months (if history repeats itself) will show drops in sales.

Sacramento Regional Real Estate Trends for November 10, 2007

As I mentioned last week, there should be another market signal that would indicate an influx of bank-owned property coming onto the market:

Another way to track the "REO factor" as it relates to regular listings might be to look at weekly average time-since-last-sale for all listings. A downward trend could indicate an increase in REO inventory on the market since foreclosures are recorded as sales by the county assessor. I'll be exploring this angle in the near future.

Here's my first attempt at looking for such a signal:


After some thought, I realized that my source of resale data doesn't go back far enough to include all the current listings on the market. I think the SIT subcategory works well enough since it's guaranteed to capture all of the REOs that show up (assuming the banks price them lower than the repo price).

Anyway, as you can see, in Sacramento County the average days-since-last-sale for SIT listings had been increasing steadily until early October, when it took a nice drop. We know that SIT inventory has been steadily increasing during that time, so there must have been a quantity of recently transacted houses returned to the market:


This seems like an interesting way of looking at the data, and I plan on looking for other ways to refine it. If you have any suggestions, let me know.

As for the other trends, more of the same. It's still milestone watch for the market pain indicators, with total dollar-loss amounts in Sacramento County approaching $200 million. To put that in perspective, that's twice the annual police budget for the City of Sacramento. The decline in property value from these SIT listings alone will result in $2.2 million fewer property tax dollars collected:





The rest of the indicators continue to follow the typical seasonal patterns.

Monterey Village In The Rain

Dunmore Homes had a soap-opera moment this week when the new "owner" declared the company bankrupt. According to a Dunmore executive, the decision to declare bankruptcy came after an "aggressive move" by one creditor. In a twist, the new owner of Dunmore, (a senior executive with a local brokerage called Comstock Mortgage) reincorporated the company in New York State, which is where the bankruptcy filing took place. No doubt this was done to make life difficult for Dunmore's creditors, who are mostly Northern California-based contractors and banks.

Meanwhile, it's raining in NorCal this weekend, and they still haven't completed the roofs on several buildings in Monterey Village. By the way they're treating their current creditors, I seriously doubt Dunmore will find anyone willing to do the work without cash up front. These buildings will continue to deteriorate all winter.

Distressed Properties Update

I'm starting to sound like a broken record...The month of October brought more of the same. Inventory stands at 17,553 for the 4 county area (drop of 478 for the month). Distressed properties increased by 610, bringing the new total to 6,693, or 38% of the TOTAL listing count! Compare this to Elk Grove with 52% and El Dorado Hills with 17% and you get an idea how much difference a few miles can make.

Sacramento Regional Real Estate Trends for November 3, 2007

A couple of interesting milestones occurred this week. One, the SIT ratio in Sacramento County breached 25% of total inventory. There also seems to be no top in sight for total dollars lost and average percent loss per house. Average SIT loss per house is now at 18% of previous price paid:




On the FIT data, I would like to point out again that, although the importance of tracking "flippers" has diminished as stress in the marketplace has overwhelmed regular sellers, the two-year cutoff for defining a flipper will work nicely as a proxy for detecting REO inventory as it comes on the market. Indeed, after several weeks of declines, flipper (and FIT) market share and inventory has begun to stabilize:



Another way to track the "REO factor" as it relates to regular listings might be to look at weekly average time-since-last-sale for all listings. A downward trend could indicate an increase in REO inventory on the market since foreclosures are recorded as sales by the county assessor. I'll be exploring this angle in the near future.

Other than that, the normal seasonal trends are firmly in place. Once exception is $0-$200K inventory, which continues to grow in both Sacramento and Yolo.