April 29, 2008
Perspective On California Foreclosures And The Current Housing Cycle
Get over the source of the graph (Bubble Markets Inventory Tracking) and the fact that the epicenter of foreclosure activity is centered down south (at least currently), it’s still relevant perspective regarding this housing cycle (and at some level will most likely matter to you).
And while foreclosures did only account for 5% of all resales in San Francisco County (not MSA) last quarter versus 33% Statewide, do keep in mind that’s two points higher than what was recorded Statewide in the first quarter of 2007 (3%).
∙ CA Foreclosures 2008 Q1 [Bubble Markets Inventory Tracking]
∙ California home foreclosures hit a record [Los Angeles Times]
∙ Yes, The Greater California Housing Market Does Matter To You [SocketSite]
First Published: April 29, 2008 1:00 PM
Comments from "Plugged In" Readers
Even if that chart were plotted on a log scale it would still look startling.
Posted by: The Milkshake of Despair at April 29, 2008 1:09 PM
48,000 foreclosures in 3 months...
Time to change my name back to "Bitter Renter"?
I recently saw a townhouse for sale in San Rafael that could (theoretically) have positive cashflow. Perhaps I'll change my name to "Bitter Landlord" in 6 months ...
Posted by: Jimmy (Waiting for Ragnarok) at April 29, 2008 1:10 PM
There would have been more foreclosures, but the industry quite literally cannot keep up.
These are for sub prime foreclosures - not a big part of the SF market. When the alt-a foreclosures begin in earnest in 2009 and beyond (pretty much all of the 80% of the option arm crowd making only the minimum payments are toast - and that's just for starters), you'll start to see the effects of foreclosures in SF.
Posted by: tipster at April 29, 2008 1:22 PM
Posted by: anon at April 29, 2008 1:32 PM
It looks like about five years to get from trough to peak foreclosures in the last big cycle, so another two to three years until we hit the peak this time around?
Posted by: Michael at April 29, 2008 1:56 PM
I know it's not SF, and as a "bridge-and-tunnel" gal, I may immediately lose street cred with some...
But, I was still disheartened to use sfgate.com's searchable tool for foreclosures in Lafayette (http://www.sfgate.com/webdb/foreclosures/) and find that a whopping 7 homes were foreclosed on so far this year.
So, when folks say, "The Bay Area is different," I'm thinkin' they must mean Lafayette! We're renting and watching for any hope of price declines in area code 94549. Nothing signifcant so far...
Posted by: bplucey at April 29, 2008 2:24 PM
Wow, based on the last recession pattern it looks like foreclosures could be huge for the next 2-3 years, at least. Somehow I doubt that all the public employees losing their jobs in the new fiscal year (July) will help reverse this trend.
Posted by: snark17 at April 29, 2008 2:34 PM
Time to buy in the outlying areas that have been hit the hardest. If you can get a CA property to cash flow and you don't mind holding on for 5-7 years - you'll double your money....
Posted by: Smart_Money at April 29, 2008 3:15 PM
Chief Steward of the Titanic speaking:
Things are still high and dry here on the top deck and we have two for one Gin Fizz's, so come on up. Remember it is all about location, location, location.
Posted by: redseca2 at April 29, 2008 3:28 PM
To be clear, I am NOT a cheerleader for the housing market and I do NOT believe that any area is immune. My husband and I have been railing against the insanity of house prices for years. (It's why we're renting - the New York Times "To Buy or To Rent" graphic consistently shows us that even after staying put for 30 years, it would not be financially better for us to buy in our area rather than rent...) And we DO have 20% down and high credit scores...
I think there SHOULD be a correction. I think it IS happening in many places. I'm just impatient for it to happen in MY place!
(And if someone can come up with numbers to show me that the decline has indeed hit Lafayette - although it would be a non-SF topic - I'd be all ears...)
Posted by: bplucey at April 29, 2008 3:58 PM
My guess is prices will start coming down sooner than people realize... Look at 1409 Sanchez St in district 5-C/Noe Valley. The house was originally listed for $1.1M on 1/11/08 and is now selling for $799k. The house is a complete tear down and was 100% financed in Dec 2005 for $868k. The lot is worth $500k-$600k tops assuming a tear down followed by the construction of a 2000sqft house (Total cost would be about $1.4M).
Posted by: unearthly at April 29, 2008 4:52 PM
Part of the big problem with foreclosures is what they do to the whole neighborhood scene. How they can drag an area down. My daughter owns a really nice condo in Newark (yes it appreciated 150% since she bought 8 years ago) and since she works in Menlo Park this is ideal for her. BUT in certain areas of that city and others around it the people who are foreclosed on are angry and bitter, and many are taking it out on the houses they have lost. Broken windows, trash strewn around etc. This may be the tip of the iceberg for this kind of desperation. People thinking it "was not my fault ... no one told me" etc.
Posted by: Oceangoer at April 29, 2008 5:21 PM
Aggregated data like this is useless. Much more helpful to have data that is segmented by zip code. At that point, a very different story will emerge
Posted by: need_F40 at April 29, 2008 5:39 PM
And now for a good chuckle (2/13/2008):
Ask us: What’s up with 1409 Sanchez?
The status of this property is “pending” and scheduled to close in March. Make no mistake, Noe is indeed still hot.
Posted by: unearthly at April 29, 2008 5:44 PM
Dood! You broke your graph. That's just wrong.
Posted by: vox at April 29, 2008 6:19 PM
I agree that data sorted by zip code would be useful, but I disagree that "aggregated data like this is useless." And I remember when folks used to say, "Sure prices are dropping in AZ, but N.Cal will never decline"...then it was "Sure they are dropping in XYZ County, but never in SF"...now I think I hear, "Sure forelosures are happening in SF, but not in the 'right' zip codes."
No doubt there is a tiny cohort of the uber-rich who are immune to the rest of the economy/society. My guess is that it's a lot tinier than most people realized, but that's just a guess. We'll see. To me, it looks like a game of musical chairs: slowly but surely there are less safe places to sit.
Posted by: Wonkster at April 29, 2008 6:57 PM
Last time we checked we all lived in California. The fact that foreclosures have more than quadrupled in one year is not useless information.
This is orders of magnitude, not degrees.
Posted by: noseeum at April 30, 2008 8:50 AM
If that chart continues its current trend line soon no one but banks will own any homes.
Posted by: Rillion at April 30, 2008 9:25 AM
They are actively recruiting "foreclosure attorneys" in Sacramento (I imagine other places too). Any out-of-work attorneys out there can apply.
Posted by: Publius at May 1, 2008 11:04 AM