Status Quo in California’s Foreclosure Sales Since May
The continuous housing market recovery and the overall decline in inventory is pressuring down foreclosure sales across California.
According to Property Radar, the volume dropped 5.5% in August, compared to July, with foreclosure sales trending “mostly sideways since May.”
The trend reflects recovery patterns including the shrinking pipeline of notices of default and notices of trustee sales.
Foreclosure sales to third parties fell 19.7% in August while bank sales of real estate owned properties surged 7.2%.
Analysts attribute at least part of the change to a letter sent by the Office of the Comptroller of the Currency in July to banks specifying “minimum standards for handling” foreclosure files resume. The letter encouraged several of the largest banks to start foreclosure sales following a temporary pause.
Over the past 12 months, however, foreclosures sold to third-party buyers dropped 69.4% compared to 72.3% for resales, following a general trend of shrinking inventory.
In today's market, “there’s something for everyone,” said DataQuick president John Walsh. In August Southern California home buyers paid $4.68 billion in out of pocket down payments or cash purchases. But as fall and winter approach, “we’ll probably see year-over-year price gains continue to taper,” he said, changing the sales mix through “a big increase in mid- to high-end sales and a big decline in sales of lower-cost distressed properties.”
DataQuick reported a 12.8% dip in overall sales in California, including fewer cash and investor purchases in August below the average sales volume level of 26,452 and the lowest reported since 1988 when DataQuick’s statistics begin.
Resales of homes foreclosed in August or in the prior 12 months accounted for 7.1% of California’s Southland resale market, down from a revised 7.7% the previous month and 19.2% a year earlier.
It marks the lowest resale rate since June 2007 when the resale rate was 5.5%, and also is significantly lower than its 56.7% peak in February 2009.