I just got today's REALTOR Magazine Online Daily Update. This was one of the stories that was featured. It is about how foreclosures are up. They make up 10% of the listings in CA, as opposed to 1.7% last year. But, at the same time, distressed properties aren't listed at much of a discount compared to other properties.
A month ago, I posted this update for part of my area. If you struggle through to the end, you'll see this passage:
Foreclosures will start to get more attractive if the lenders start to get realistic about the prices. I see many of these homes priced well above comparable homes plus needed renovation (even with free labor). Until the prices on these properties drop down low enough to allow rehabilitation, these properties won’t sell in any significant number. There are some that are selling, but not to experienced investors or “flippers”. A good example is a home selling at $175k in a subdivision that should net $185k - $200k. The property needed around $20k in renovations to bring it up to area standards, not including most labor. A possible $5k profit is not sufficient for an investor to consider the property. That limits its market to investor/occupants. As the number of foreclosed properties increases, these limited buyers will dry up.
Did I call this one?
When the REOs start dropping, they may start moving. Right now, the banks still think they can get the money out of them that they are into them for, despite the fact that they are over-priced and under-quality. I think when we see a bunch of the REOs start to get attractive, we'll see more balanced listings/solds ratios.
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