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For homes priced below $500,000, 56% of the market, demand is HOT.

The start to 2012 is extraordinary.
The Orange County housing market is revving its engine and is a strong sign that this year is going to be different than all other years since the beginning of the downturn, the autumn of 2005. Many point to 2007 as the last time things were good for housing, but, in terms of activity, it dates all the way back to 2005, more than six years ago. It makes sense that the lower range is where all the activity is at right now; after all, prices plummeted first in the lower range. (…)

In Orange County, there are three distinctly different markets. It would be a mistake to make decisions based upon expected pricing for the entire county. So, throw out reports of the median sales price and drill down a little bit deeper. Let’s take a look at the three totally different markets. In the lower ranges, we can expect very little change in pricing. Remember, 76% of the market is below $750,000 and 56% can be found below $500,000. I believe that in some unique areas and neighborhoods, the market could even appreciate slightly. But, distressed properties, 47% of the active inventory in the lower ranges, will keep a lid on any real appreciation. For the middle range, homes priced between $750,000 and $1.5 million, we can expect slight depreciation in prices, less than 5%. Since only 15% of this range is distressed, the pressure on pricing is not as great. In the upper ranges, above $1.5 million, distressed properties do not have as much of an impact, only 5%. Instead, there are just far too many sellers and not enough buyers. Values in the lower ranges dropped over night with a flood of distressed homes, and have subsequently stabilized. The upper ranges have not been inundated with distressed properties; thus, the downward movement in values has been a much slower process. In essence, they are arriving late to the party. Prices are a lot stickier with less distress, but applying simple supply and demand rules, success often comes at the hands of more aggressive pricing. In 2012, prices will be most volatile in the upper ranges just as they were in 2011.

Credit: Steven Thomas, Orange County Housing Report

Foreclosures are getting faster at JPMorgan Chase and Wells Fargo. The two big banks trimmed their foreclosure timelines by as much as 100 days in the third quarter of 2011, helping to work through major backlogs of foreclosed loans, according to a Moody’s Investors Service report. But while foreclosure sales are getting speedier, the report warns that there’s still a long way to go in working through large inventories of REOs that are continuing to slam the nation’s banks.

Chase averaged 264 days from referral to foreclosure sale in the third quarter for subprime mortgages — a big drop from the 412 days it averaged three months prior to that. Chase boasted the shortest time of any of the big five mortgage servicers. Wells Fargo also greatly reduced its foreclosure timeline to 314 days from 454 days compared to the previous quarter.

Please contact the Csira Group for questions relating to foreclosures and short sales at (949) 509-7700.