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Any Light At The End Of The End Of Solano’s Foreclosure Tunnel?

February 17th, 2010 categories: Benicia, Buying, Fairfield-Gr Valley, Foreclosures / Short Sales, Market Update, Selling, Solano, Suisun City, Vacaville, Vallejo

Everyone agrees that the real key to restoring the economy and home values lies in working through that huge backlog of distressed properties.Pull Quote

For, the sooner we get to a point where the lion’s share of active listings are being sold by regular sellers with equity rather than banks or upside-down borrowers, the sooner this ugly market will be behind us.

About six months ago, I downloaded the foreclosure statistics for all five cities in our Solano County market area and back then almost 60% of what had already been foreclosed upon had not yet come on the market. Most banks were keeping what has become known as their “shadow inventory” off the market.

Since that time, the banks have started to release more inventory, but rather than a flood, the release of new bank-owned listings has been more of a trickle. So a few days ago, I decided to download the raw foreclosure data and see if anything had changed.

REO Graph for Solano - 2-15-10In a nutshell, as the numbers above and below illustrate, it looks like we still have quite a way to go before the local housing market in Benicia, Vallejo, Fairfield, Suisun and Vacaville finally returns to normal.

Here are a few statistics that will give you a sense of what lies ahead:

  • As of Feb. 15, there were 2,055 already-foreclosed homes in those five Solano cities. Yet, a startling 69% of those (1,425) have yet to come on the market. So that shadow inventory has actually grown by 11% since my August report.
  • 2,186 more homes are now in the final stages of foreclosure and could turn into new REOs within a matter of days or weeks.
  • And another 2,422 homes have had a notice of default recorded against them, which means that they’re between 1-4 months of being foreclosed upon, too.

Add in the 240 REOs that were actually on the market as of Feb. 15 and that means there are now almost 6,300 homes in Benicia, Vallejo, Fairfield, Suisun and Vacaville that are either unsold foreclosures or heading that way.Foreclosure Absorption

To put that number in perspective, consider how long it would take to work through 6,300 listings, based on the average weekly sales activity for those five cities.

I track those numbers in my Solano Weekly Housing Report and based on this year’s average weekly pending sales figures, it would take anywhere from 13.5 months to 16.6 months just to exhaust what’s presently on the market or in the foreclosure pipeline in those five Solano cities right now.

And that doesn’t include all those people who are behind on their payments but haven’t yet had a notice of default recorded. Nor those who are upside-down on their mortgage and might soon find themselves forced to sell due to one of life’s many unavoidable circumstances.

It also doesn’t include those “regular” traditional sellers who aren’t  selling out of necessity (remember them?).

Solano Foreclosure Chart - 2-15-10

If you’re looking for some positive news or perhaps a ray of light, as the above chart shows, the number of properties where a notice of default (NOD) had been recorded actually went down since August. Meanwhile, the number of trustee’s sales went up.

Since the foreclosure process starts when an NOD is recorded and finishes when a trustee’s sale is completed, it’s always far better to see fewer homes at the beginning of the process than at the end, which is what the above numbers show.

So maybe those numbers are the first signs that we’re indeed starting to work our way through the foreclosure doldrums. But then again, a few months from now we might find that things have reversed themselves again.

In any event, as these numbers clearly illustrate, though the market itself seems to have stabilized, we’re by no means out of the woods just yet.

From here, it looks like we still have quite a ways to go before that pipeline really starts to dry up.

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This entry was posted on Wednesday, February 17th, 2010 at 4:38 pm and is filed under Benicia, Buying, Fairfield-Gr Valley, Foreclosures / Short Sales, Market Update, Selling, Solano, Suisun City, Vacaville, Vallejo. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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