I just had a little inspiration from one of my clients  to check out the latest statistics for foreclosure listings in South Lake Tahoe. I had a client that emailed me four bank owned listings that he wanted to see today.  While setting up appointments to view these listings I had learned that one of the properties had just gone into escrow, and the other three already had offers on them! Does my client have great taste or what? I thought that I would look into the latest market activity to see the latest foreclosure trends here in Tahoe. 

There are 479 residential listings on the South Tahoe MLS (both single family homes and condos).  Out of the 479 listings, 62 are bank owned foreclosures. That means that foreclosures account for only 13% of the total current inventory of single family homes listed on the MLS.

Currently 93 of the 479 single family listings are in escrow. Of the 93 properties that are in escrow, 28 are bank owned foreclosures. Although foreclosures only account for 13% of our inventory, they account for 30% of the properties that are in escrow.

In February 2010 there were 103 single family homes that were in escrow on the South Tahoe MLS. Of the 103 properties that were in escrow, 22 were bank owned foreclosures. Foreclosures accounted for only 21% of the properties that were in escrow.  Since last year, the number percentage of foreclosure to non foreclosure escrows has increased by 8%.

The banks are  pricing foreclosures lower than the other properties that are on the market which is why there is so much interest in foreclosure properties.  The average price per square foot of the foreclosures that are listed is $175, the non-foreclosure inventory is at an average of $251 per square foot. The median price of the foreclosures is $214,950 and the median price of the non foreclosures is $315,000.

Although the banks are pricing the foreclosures to sell quickly, most of the properties need some work. Some of the foreclosures are missing appliances, light fixtures, and other hardware. Many of the properties also have damage to the walls, flooring, cabinets, and doors. Some of the banks are now painting, replacing flooring, and replacing missing appliances and light fixtures to make the properties more presentable.

The bottom line is that if you are looking for a good deal on a property in South Lake Tahoe and you are willing to do a bit of work, foreclosures are worth looking into. With all of the recent activity on the foreclosures, you will also need to act quickly when you find a property that you like. The chances are that there will be other buyers interested in the foreclosure as well!

5 Reasons to Buy a Home in 2011
Michele Lerner, author of Homebuying: Tough Times, First Time, Any Time, offers reasons why real estate is likely to improve in 2011. Here are five reasons she thinks consumers should consider a home purchase next year:▪ Mortgage rates will stay low. Even with rates climbing – maybe to as high as 6 percent by 2012 – they are still well below where they have been historically.
▪ Tax cuts could help. Extending the tax cuts could encourage a more rapid recovery for the economy.
▪ Americans want to be home owners. A recent Fannie Mae survey showed that Americans still believe a home is a safe and desirable investment.
▪ Builders are about to begin building. Home builders have been sitting on the sidelines. This year, they think pent-up demand will create an appetite for new homes.
▪ Homes are shrinking. Homes are getting smaller, which has made them more affordable.

Source: Investopedia, Michele Lerner (12/24/2010)

In a news article on Realtor.org there was an interesting article about the pending home sales index. Realtor.org is the National Association of Realtors webisite.

Pending home sales rose again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the NATIONAL ASSOCIATION OF REALTORS ® .

The Pending Home Sales Index, a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”

The PHSI in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009. In the Midwest the index declined 4.2 percent in November to 78.3 and is 7.7 percent below a year ago. Pending home sales in the South slipped 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009. In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.

“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent.

For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained. “All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”

Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.

“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.
New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.

Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent.

Yun discusses the latest PHSI reading in a 5-minute video.

Source: NAR