patrick.net

2 cents says

I too don't buy the shadow inventory in the bay area. Or if there is such an inventory the banks would greatly prefer to sell in bulk to investors as they have in the past. I have gone after a few foreclosures and have found the process to be much more confusing than a regular purchase.

Anyone who has tried to buy a house recently knows that the bidding wars in certain areas are back

Yeah, well how does that explain that most of the houses around us in a nice part of the east bay sit on average for at least 6 months before selling, and then usually at less than asking? Again- we're talking about abnormal action happening in a very small slice of the overall Bay Area. Hardly an indication of anything other than what we already know: The rich areas are expensive. Big deal.

I called Pete from the number on the article. He was very nice, polite, and business like. He said the house with the 3 brown poles, tree by the awning, and tan/ brown color is on Churchhill Lane in Los Altos.

I still can't find the sale record.

edvard2 says

Yeah, well how does that explain that most of the houses around us in a nice part of the east bay sit on average for at least 6 months before selling, and then usually at less than asking? Again- we're talking about abnormal action happening in a very small slice of the overall Bay Area. Hardly an indication of anything other than what we already know: The rich areas are expensive. Big deal.

I would explain it by saying I guess not as many people want to live there... not sure I get your point.

I would hardly call Santa Clara a "rich area" in the bay area. It is convenient, but not what I would classify as the upper end market. Just thought I would confirm that what I consider a mid-market area is experiencing extremely low inventory.

edvard2 says

Why does it really matter if supply is limited in the "desirable" ( specific SV towns and parts of SF) areas anyway?

It matters to me based on where my job is, and where it will likely be. Losing 6-10 hours of free time each week to a commute is something that I, and a lot of others, would prefer to avoid. The obvious trade-off seems to be in house pricing. I don't care at all about the schools or shopping convenience, I care about not spending a ton of time pissed off & in traffic. I used to commute from central San Jose / Cambrian to Mountain View, which isn't even "bad" by many commute standards, but living 5 minutes (on a bike) from work now is worlds better.

As 2 cents above notes, Santa Clara is nothing remarkable, and for some reason it is experiencing supply shortages & high demand. I guess that since MV/PA/LA are all way beyond reason, the people that can't borrow their way into those places are moving on to Santa Clara. Locusts!

2 cents says

I too don't buy the shadow inventory in the bay area.

The real shadow inventory is all the people who borrowed and bought between 2004-2008 in the Bay Area who are now underwater by hundreds of thousands$$$.

Pick a block you are interested in living on and zillow all the last sale prices. There's your soon-to-be inventory.

How long those folks are going to hang on before short selling or foreclosing? How many of them will strategically default?

In San Francisco proper we are seeing capitulation in the further-flung neighborhoods (Bayview, Excelsior, Outer Mission), but it's starting to creep inward.

Pacific Heights will NEVER be cheap, so don't hold your breath for an affordable mansion with views of Alcatraz. Certain "hot" neighborhoods like the Inner Mission and Bernal Heights are insane, and may not come down that much further than they have. But there are still plenty of other regular nabes with middle income folks that will (hopefully) see another leg down.

Just my 2 cents, adjusted for inflation.

We have been actively looking in the city, but will realistically wait and rent another year or two if we don't find what we really want at a price we can afford.

1sfrenter says

We have been actively looking in the city, but will realistically wait and rent another year or two if we don't find what we really want at a price we can afford.

Same with my fiancee & I. We are hoping that 2012 is yet another year when people make poor decisions & end up driving the market lower once they are sufficiently underwater. The media seems to be pushing the "2012 year of recovery" angle, and a lot of people that want to believe that seem to be buying it. Hopefully by Q3 it will become obvious that it was a trap, and people will get desperate to unload once they see that there was no light shining at the end of that tunnel.

At the very least, we are waiting until after the election. The candidates know that all sorts of people are underwater, and they are going to promise free houses & money to all of them to buy votes. Once the dust settles & they stop pretending to give a shit about broke house debtors, things should resume their downward slide.

bmwman91 says

Why does it really matter if supply is limited in the "desirable" ( specific SV towns and parts of SF) areas anyway?

If those places are your home, where you work and where your kids go to school and where you have roots and community, then yes, it does matter. Just not to you...

If you are twenty-something and childless, maybe relocating is an option. But once you have kids and hit your forties and are established in your career....

bmwman91 says

The media seems to be pushing the "2012 year of recovery" angle, and a lot of people that want to believe that seem to be buying it.

They've been saying this for 5 years running.

1sfrenter says

bmwman91 says

The media seems to be pushing the "2012 year of recovery" angle, and a lot of people that want to believe that seem to be buying it.

They've been saying this for 5 years running.

For sure. This year seems to have extra fervor though, probably due to the elections coming up.

Yes I cant wait for Obama to brag about all the bailouts he has done (saving loanowners and thier loans!) and to promise even more bailouts for the banks (loanowners loans again disguised as housing).
Of course the R party is the same party (except for non financial doesnt matter cant enforce it anyway stupid social issues).

1sfrenter says

The real shadow inventory is all the people who borrowed and bought between 2004-2008 in the Bay Area who are now underwater by hundreds of thousands$$$.

While that may be true, time will take care of some, some will give up, and others will stick it out until their house is paid off. I would not deem it as bulk inventory screaming to come back on the market.

I don't know much about the city, only my little corner of the bay area. SF is another world to me, but here is to hoping your strategy pays off for you.

Here is something to consider:

here is a search for zipcode : 94043 (mountain view, not high end)
redfin : for sale : 12
realtytrac : regular sale (5) , foreclosure sale (7) [adds upto 12 reported by redfin],
but here is a kicker : in-foreclosure : 72 !

see the screen shots

2 cents says

I too don't buy the shadow inventory in the bay area.

image from realtytrac

Wow, a 90% Foreclosure Micro Market.

I suppose we should believe the article.

You should make the same comparison for Santa Clara, only since it was mentioned that the inventory is so low.

I made a thread last week about the this. Based on the numbers from foreclosureradar & hotpads, the shadow inventory of houses in foreclosure (but not listed) is many times the size of the market of regular listed sales.

The real question is whether or not those houses will become available to the public to purchase. My bets are on "no" since the RE game is a rigged one, and the only people that I think will get access to them are in large institutional investing firms.

bmwman91 says

and the only people that I think will get access to them are in large institutional investing firms.

Bingo

Santa Clara stats :
redfin : 86 for sale
realtytrac : in foreclosures 244

@patrick
the image scaling / resizing isn't working correctly.

75% Foreclosure Micro Market.

Let me get out my check book.

1sfrenter says

Pacific Heights will NEVER be cheap, so don't hold your breath for an affordable mansion with views of Alcatraz.

For many in decades past, Pacific Heights never mattered, so why should it matter today and decades into the future.

RentingForHalfTheCost says

I think the claim is true. Movoto shows only 26 homes forsale today in Santa Clara.

You have over 64 sold last month in SC City from +1200 total county.

http://dqnews.com/Articles/2012/News/California/Bay-Area/RRBay120315.aspx

http://dqnews.com/Charts/Monthly-Charts/SF-Chronicle-Charts/ZIPSFC.aspx

permanent_marker says

the image scaling / resizing isn't working correctly.

Thanks for telling me! OK, scaling is fixed now, but width is still limited to 500 pixels.

Should I make the maximum image width 600 pixels instead? Might muck up the text formatting a bit.

Should I make the maximum image width 600 pixels instead? Might muck up the text formatting a bit.

@patrick
thanks for fixing it!
500px width is fine; could you make the images clickable to show the actual image
(I don't want to hijack the thread... )

permanent_marker says

could you make the images clickable to show the actual image

OK, done! Well, it's done for new images from now on. All the old ones are already formatted and the formatting was not clickable. I'd have to change the database in a big weird way to find all the existing images and make them clickable.

More suggestions please!

generallyfd says

I can honestly say that if I were a Facebook millionaire, I wouldn't buy any bay area property. I'd "throw" my money away and rent a really, really nice house somewhere until I built my dream home elsewhere.

$5M is sitting in your bank.. all cash.

You get up one morning say 6 or 7 am ready for another day at work and it hits you. Everthing changes! You reach over and leave a message on your bosses, voice mail. "I quit". You lay there contemplating.. "what now?".. its a very strange feeling.
Everything looks and feels diferent.

The foreclosure maps are not helpful unless you remove the NOD (notice of default). 90+% of the NODs recover, or are sold at normal market value.

permanent_marker says

Santa Clara stats :
redfin : 86 for sale
realtytrac : in foreclosures 244

...Precious...

Netreality says

The foreclosure maps are not helpful unless you remove the NOD (notice of default). 90+% of the NODs recover, or are sold at normal market value.

I am not sure I would use the foreclosure maps as any kind of barometer as to the health of the market or direction of prices. I am actively looking for a good foreclosure in the area and I have not had any luck finding a bargain amongst them. If it has any kind of rental value there is good competition. The one I went after as a residence a couple of years ago ended up getting dozens of offers and I had no sense of where the other bids were. The top bidder didn't get a great bargain, but did get a nice house (for Santa Clara).

2 cents says

I am not sure I would use the foreclosure maps as any kind of barometer as to the health of the market or direction of prices

I do. Cause the market is tanking.

edvard2 says

2 cents says

I am not sure I would use the foreclosure maps as any kind of barometer as to the health of the market or direction of prices

I do. Cause the market is tanking.

But the market is going up? Foreclosures are being sold at higher than market value. It doesn't matter that they have been sitting idle for the last 2 years. People like the fact that they have to reinstall the copper piping and repair the walls and fixtures. It means they can shop at Home Depot. People's savings accounts are growing incredibly with the huge unemployment and welfare checks. They are looking for somewhere to pull all that cash. The cost of food and energy has dropped to nearly nothing so they find it hard to spend the check fast enough before the next check arrives. What a great time for our country!

Yes, a high NOD rate is indicative of a healthy RE market. Clearly, there isn't enough money here to support the market or these NODs wouldn't happen in the 1st place. This fact should not be ignored.

Also, Netreality, please show us a citation WRT 90% of NODs recover or are sold at market.

I'd hazard a guess that 90% are short sold under market and maybe 10% of the owners recover or get mods.

I think the real issue here isn't the shadow inventory of foreclosures, because the banks and uncle sam control that market. It's the number of would-be short sales where the owners are holding out hope for a principal reduction. Once that ship sails, I think we'll start to see more short sales hit the market.

But I doubt we'll see principal reduction dreams crushed during an election year. 2013 will be the earliest inventory begins to rise again.

gregpfielding says

But I doubt we'll see principal reduction dreams crushed during an election year. 2013 will be the earliest inventory begins to rise again.

Good point. I never though of the implications of the election year. I guess we can label 2012 as the "wait-n-see" year.

This is so different, yes, in Southern California, than the last housing downturn around 1993.

1.) No property auctions or very few at high reserve price
2.) Low inventory, debateable quality and features of available listings
3.) Extended time length of market stagnation
4.) Expected market behaviour different than real market behaviour considering most of the properties available are bank owned or short sales.

Hmm, clicking the images to get larger versions does not work for me...

It will only work for new images. That is, images posted after Wed, 28 Mar 2012 at 4:41 pm.

My husband and I currently rent a 2bdrm 2 ba apartment for $2200!

After following the market for a year or so, we had finally (after much hesitation) decided to buy a house -
Renting a 3bdrm 2ba house in santa clara/sunnyvale/milpitas area is currently about $2600. And buying a similar house with 20% down payment is $2800 - it made sense - why shouldn't one buy?

And now this article comes along and we're back to square one and confused again! Thanks Patrick.net! :(

I believe that housing is going to go further down, especially in bay area. Does this mean that the world is going to go to hell in a hand basket if I am right? Is the sky really falling?

bg says

Does this mean that the world is going to go to hell in a hand basket if I am right?

LOL! when you look at the long history of home prices like that of the SFBA, the answer is NO! its going back to normal. And yes, its Hell for those who were making a rich Commissions on the sale of Bubbles... They will see or have seen a 75% drop in their commission earnings. So it depends who is asking...

Back to normal lower prices is good for everyone !