Saturday, March 17, 2007

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         

2 Comments:

Blogger 10SBUM said...

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.

11:56 AM, March 19, 2007  
Blogger bearmaster said...

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.

12:23 PM, March 19, 2007  

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