L.A. Times: A town right on the default line
In my anticipation of housing market doomsday, one thing I had not considered was the emergence of bad loan ghost towns, but now I am wondering if that is so far-fetched. From the tone of this March 16 article by David Streitfeld, it appears that entire housing communities have been built in recent years and funded by substandard loans. I am more inclined to think that properties will pass like hot potatoes from flipper to flipper, or at least those too quick and eager to buy the dip. In the meantime, we patiently wait to see what transpires.
The article chronicles what is happening in Perris, a town in Riverside County. The dream of the suburbs is in danger from lenders too eager and willing to lend and borrowers who thought their houses were ATM machines. Right now 1 in 53 houses in the central zip code of Perris have received notices of default. Lake Elsinore and Moreno Valley are not far behind in these glum races to see who can default the fastest and the mostest.
Comparatively, Palmdale currently has 1 in 105 getting NODs; 1 in 150 for Van Nuys; 1 in 189 for Northridge, and 1 in 293 for Altadena. The coastal beach communities have NOD rates too low to make the top list. When you look at the search utility alongside the article to look up default notices, keep in mind that the search utility reports by zip code. I think the article reports these default rates for these particularly cities in aggregrate, however.
Some homeowners in Perris are gritting their teeth, determined to "ride it out", and "look at it for the long term." Only there is a problem with that reasoning. It sounds brave on the surface. But famous books on financial manias and panics state otherwise that the grind down lasts a lot longer than most people can.
You can check out the L.A. Times search utility here.
By the way, I've been starting to keep track of properties "in trouble" in Redondo Beach. It's not a complete list, but the amount of trouble is definitely on the rise here. I think I recognize some of these addresses as recent odd sales.
ADDRESS LISTING DATE LOAN DATE TRUSTEE'S SALE DATE
xx218 Eladsgnik Ave
8122 Seehroov Ave
5152 Eigenrac Ln
6082 Niabcm Avenue 03/13/2007
6072 Noslen Ave 03/05/2007 05/26/2006 03/14/2007
1291 Aisetra Blvd 03/05/2007 12/23/2004 03/14/2007
7181 Drofnats Ave 03/01/2007
8042 Rellefekcor Ln 02/23/2007
3252 Tlibrednav Ln 02/15/2007
0152 Ruomra Ln 02/07/2007
3142 Namirrah Ln #B 02/05/2007 10/25/2005 02/14/2007
2022 Notgnitnuh Ln #B 02/05/2007 03/22/2005 02/23/2007
3152 Swehtam Ave #A 01/29/2007 08/20/2004 02/22/2007 somebody bought 02/21
$670K, seller paid $650K
08/15/2004
81581 Eladsgnik Ave 01/29/2007 05/04/2006 02/08/2007 saved?
308 Relgalf Ln 01/28/2007
2112 Kralc Ln 01/28/2007
9062 Sitruc Ave 01/28/2007
206 Nalehp Ln 01/22/2007 06/20/2005 02/06/2007
32581 Nirub Ave 01/16/2007
4142 Noslen Ave #A 01/02/2007 03/31/2005 01/11/2007 sold for $686,219?
0141 Aisetra Blvd 12/26/2006 10/05/2005 01/12/2007
1501 Euneva D 11/27/2006 08/05/2005 12/08/2006 sold 02/14/07 for
$745,715, listed again
in March for $835K
7001 S. Anilatac Ave 206 11/06/2006 06/30/2005 11/27/2006
3391 Anomrif Ave 10/30/2006 03/14/2002 11/02/2006
206 N. Cificap Tsaoc Hwy 09/05/2006 09/21/2005 09/20/2006
4033 Egdnir Ln 07/31/2006 11/01/2005 08/09/2006
8011 Onimac Laer 301 07/03/2006 08/22/2000 07/12/2006
5022 Notgnitnuh Ln #B 06/26/2006 03/22/2005 07/07/2006
757 Euneva C 05/01/2006 10/13/2004 05/08/2006
932 N. Atinauj Ave #A 04/10/2006 11/29/2004 04/27/2006
3022 Naatab Rd #A 04/10/2006 08/10/2004 04/20/2006
2072 Eigenrac Ln #2 03/27/2006 07/06/2005 04/10/2006
0112 Dleifllahsram Ln #A 02/27/2006 04/26/2005 03/07/2006
8102 Dnalhur Ave 01/03/2006 04/16/1992 01/11/2006 somebody bought 12/15/05
for $850K
4061 Dnomro Ln 12/12/2005 02/15/2001 12/22/2005
posted by bearmaster at 6:14 AM
2 Comments:
My realtor tells me that MB had a fairly substancial price jump during February. I know it sounds goofy, but they spoke of multiple offers on some big ticket homes (1.5mil and up). Is it lack of inventory, idiot buyers or what? Who knows? Most Southbay realtors talk about how "special" the area is and how it can survive market corrections. I realize MB is a nice place, but 15.6 times median income (2006 stats for the city)? I don't think so.
In February 2006, a close friend sold a scraper 4 houses from the MB Strand for 2.7mil, and then bought a very nice, brand new 2,500 sqft condo on the busiest street near downtown for 1.6mil (discounted from 1.9). A family crisis forced sale of the condo which is closing this month at 1.8. Surprised the heck out of me.
At the same time, my raw number tracking shows listings and open houses going up for 2 consecutive weeks for the first time since before the 2006 holidays. This market looks ripe for an implosion.
Hmm, a substantial price jump from when? MB sold only 21 homes in February compared to 51 homes in February 2006.
Recent articles in the L.A. Times (check the recent postings) claim some high-end areas enjoyed a recent "recovery". But their sales numbers still stink. Only a very few areas are enjoying decent sales volume at the moment (90278, 90064).
In a bubble unwinding, I would not expect prices to drop straight down (nor DOM, nor sales volume, nor inventory-to-sales ratios). I would expect each indicator of a decline to show some kind of rebound on the way down.
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