Rich Neighborhoods Riddled With Foreclosures

By Morgan Brennan, Forbes.comNovember 16, 2011
Victoria Gotti, the reality TV star and daughter of infamous mob don John Gotti, made headlines in 2009 as the latest high-profile homeowner facing foreclosure. According to the New York Post, Zillow.com and others, she had stopped making mortgage payments to lender JP Morgan on her Long Island, N.Y., estate, which she had put up for sale the prior year, finding no takers at an asking price of $3.9 million. The home, in the tony neighborhood of Old Westbury, originally cost close to $4.1 million. Two years later, she’s still in the house–now listed for $2.9 million.

She’s hardly alone, of course. Millions of American homeowners have faced foreclosure over the past several years and roughly 11 million more remain significantly underwater on their mortgages. About 7.7% of all mortgages nationwide are in trouble, either seriously delinquent or already in foreclosure. But somewhat surprisingly, ritzy ZIP codes like Gotti’s Old Westbury 11586 aren’t immune. Far from it. According to LPS Applied Analytics, 6.5%, or 33 out of the 516 active loans in her area are in some stage of delinquency. In nearby Great Neck, the default rate is even higher. Of the active home loans in the peninsula enclave, 7.2% are in some stage of foreclosure or pre-foreclosure.

We asked LPS Applied Analytics, a unit of Lender Processing Services that publishes the monthly Mortgage Monitor report, to pull the foreclosure statistics for the priciest neighborhoods in America. Using Forbes’ 2011 list of the Most Expensive ZIP Codes, the folks at LPS Applied Analytics calculated the number of defaulted loans against the total number of active loans – which include everything from subprime loans to conventional loans to jumbo prime loans (and even complicated nontraditional financing, which undergoes the foreclosure process the same way as a traditional mortgage) – in America’s 100 most expensive ZIP codes.

Where It’s Worst

The result? Perhaps not surprisingly, hard-hit Florida led our list. It has two higher end hoods in top spots: Fisher Island (No. 1) and Rosemary Beach (No. 3). Fisher Island, the Miami Beach multimillionaire enclave and the 43rd most expensive ZIP code in the country, has a whopping 20.5% foreclosure rate, with 38 out of 184 active loans in default. Rosemary Beach, a posh planned community in the panhandle and the 69th most expensive ZIP code, clocks in at 9.9%, with 10 out of 104 homes in default.

Record numbers of foreclosures have translated into price depreciations of 50% or more in many parts of the state, pushing yet more underwater homeowners into foreclosure. “The rates in Florida have been among the highest for a very long time now so I think it’s emblematic of that,” says Herb Blecher, vice president of LPS Applied Analytics. A number of high-profile Florida owners have been among the state’s default ranks, including comedian Chris Tucker, who owes more than $4.4 million on a $6 million mansion currently assessed at $1.6 million, according to the Orlando Sentinel.

Walking Away

So why do the rich face foreclosures? Loss of income, of course, is the biggest reason. But analysts say they’re seeing a rise in the number of well-off property owners who stop paying their mortgages for calculated financial reasons. “Strategic defaults can be an even bigger issue with higher-end homes, where if you’re 25% underwater that could mean hundreds of thousands of dollars or more, because the borrowers may be more financially shrewd and consider it a financial decision to walk away from the home,” explains Daren Blomquist of RealtyTrac.

He also notes that foreclosures among high-end homeowners have been rising for some time: a study conducted by Realtytrac last year from January to October revealed that defaults on million dollar and higher loans has risen 335% from 2007 through 2010, compared with a 128% rise for all categories of loans at all price points. And LPS Applied Analytics data shows that trend holding steady through this year, with jumbo mortgage delinquencies remaining nearly 300% higher than 2008 rates.

Why are foreclosures ratcheting up in these expensive enclaves? When the reason is strategic default, it’s usually because wealthier people can’t necessarily qualify for a short sale or a loan modification thanks to too much income on the books, explains Chad Ruyle, co-founder of Youwalkaway.com, a Carlsbad, Calif.-based site specializing in strategic defaults. He says the company has helped a number of well-to-do clients since its inception in 2008. “Today we have had a couple celebrities that have randomly contacted us who want to foreclose,” says Ruyle, declining to disclose identities. “The stigma around default has really changed and people are starting to see it for what it is – a business transaction with the bank.”

Here are five of the wealthiest places in America that are riddled with foreclosures:

#5 Great Neck/Kings Point, N.Y. | 11024
50th most expensive ZIP code
Foreclosure Percentage: 7.2%
Number of foreclosures: 81
Total number of active loans: 1,120

#4 Kilauea, Hawaii | 96754
90th most expensive ZIP code
Foreclosure Percentage: 9.4%
Number of foreclosures: 62
Total number of active loans: 658

#3 Rosemary Beach, Fla. | 32461
69th most expensive ZIP code
Foreclosure Percentage: 9.9%
Number of foreclosures: 10
Total number of active loans: 268

#2 Alpine, N.J. | 07620
Top most expensive ZIP code
Foreclosure Percentage: 10.1%
Number of foreclosures: 27
Total number of active loans: 268

#1 Fisher Island, Fla. | 33109
43rd most expensive ZIP code
Foreclosure Percentage: 20.5%
Number of foreclosures: 38
Total number of active loans: 184

Foreclosure Activity Increases for Third Straight Month

BY: CARRIE BAY

Foreclosure filings in October rose 7 percent from the previous month, RealtyTrac reported Thursday. Including default notices, scheduled auctions, and bank repossessions – which all increased month-

over-month – filings were reported on 230,678 U.S. properties in October.

That grand total is down nearly 31 percent from a year earlier, when servicers began putting the brakes on foreclosure actions due to paperwork issues. But RealtyTrac has documented a rise in filings for three consecutive months now – a sign that servicers are working through the backlog of cases that 

have been delayed.

While the October numbers indicate unpaid mortgages are finally making their way through the pipeline, James Saccacio, RealtyTrac’s CEO, says he’s concerned other forces at work could throw a 

wrench in foreclosure processing.

“[R]ecent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly,” Saccacio said, “creating more uncertainty in the housing market and threatening to prolong the 

road to a robust real estate recovery.”

Nevada is one example of a change in foreclosure rules. It saw a 34 percent decrease in filings, driven by a new state law that took effect in October and requires lenders to sign and record an affidavit with 

key information about any pending foreclosure.

The foreclosure hotbed of Las Vegas recorded a 36 percent decrease in overall foreclosure activity, caused by an 80 percent drop in new default notices from September to October. Las Vegas had held onto the title of highest metro foreclosure rate for 22 consecutive months, but with October’s decline, it 

slipped to the No. 5 spot.

The 1,201 new defaults in the whole state of Nevada last month was its lowest since June 2006. Even with the sharp drop-off in activity, Nevada posted the nation’s highest state foreclosure rate for the 58th 

straight month.

Defaults in California, Florida, and Michigan – on the other hand – all rose to their highest levels in at 

least a year.

California default notices increased 17 percent from the previous month to 29,240, pushing the state’s 

foreclosure rate to the second highest in the nation.

A sharp monthly increase in both new default notices and scheduled auctions boosted the foreclosure rate in Florida to fourth highest among the states. A total of 15,234 new default notices were reported in Florida last month, up 28 percent from the previous month. Scheduled auctions in Florida hit 10,655 in 

October, up 57 percent from September.

New default notices in Michigan also reached a 12-month high, increasing 13 percent from the previous 

month. The state posted the nation’s fifth highest foreclosure rate for in October.

Wedged in there at No. 3 was Arizona. Total foreclosure activity there increased nearly 18 percent from 

the previous month, but was still down 36 percent from October of last year.

Other states with foreclosure rates ranking among the top 10 were Georgia, Illinois, Idaho, Oregon, and Colorado.

-DSnews.com

California attorney general's office subpoenas Fannie, Freddie

Information is sought on the mortgage giants' roles as landlords who own thousands of foreclosed properties in California. Also sought are details of their mortgage-servicing and home-repossession practices, a source says.

By Alejandro Lazo and Jim Puzzanghera, Los Angeles Times

November 16, 2011, 6:27 p.m.

Reporting from L.A. and Washington— 

Investigators with the California attorney general's office have subpoenaed information from mortgage titans Fannie Mae and Freddie Mac as part of a wide-ranging inquiry into lending and foreclosure practices in the state.

The subpoenas ask the government-controlled finance companies to answer a series of questions about their activities in California, including their roles as landlords who own thousands of foreclosed properties. The attorney general's office is also seeking details of Fannie and Freddie's mortgage-servicing and home-repossession practices, according to a person familiar with the matter.

In addition, investigators want to learn more about the companies' purchases and sponsorship of securities holding "toxic mortgages" in the Golden State, said the person, who was not authorized to speak on the matter and requested anonymity.

Fannie and Freddie declined to comment on the investigation. Shum Preston, a spokesman for state Atty. Gen. Kamala D. Harris, also declined to comment.

Edward Mills, a financial policy analyst at FBR Capital Markets & Co., said Harris has been the most aggressive state attorney general in trying to assist those borrowers who are "underwater" on their mortgages, owing more on their properties than they are worth.

The move to open an investigation into Fannie and Freddie, Mills said, is a creative way to potentially force policy changes from the mortgage giants over the objections of their regulator, the Federal Housing Finance Agency in Washington, which is headed by Ed DeMarco.

"She's felt that Ed DeMarco has not done enough to help homeowners and has undue influence over what changes are put in place at Fannie and Freddie," Mills said. "If he's not going to make those changes, she's going to force those through the courts."

The California investigation comes as DeMarco and the chief executives of the two companies faced bipartisan outrage this week over multimillion-dollar salaries and large bonuses at the housing finance giants, which still owe the government a combined $150 billion in the largest financial crisis bailout.

Harris this month pushed for Fannie and Freddie to allow more principal reduction, which is the writing down of the loan balances of troubled borrowers.

"If Mr. DeMarco is unwilling to support principal reduction for these home loans in crisis, he should step aside for someone who will," Harris said.

DeMarco, in turn, said Wednesday during his congressional testimony that the agency has determined that reducing principal on loans owned by Fannie and Freddie is not "the least-cost approach for the taxpayer" to keep homeowners from foreclosure. In addition, those reductions are not authorized under the law that allowed the firms to be seized, DeMarco added.

"I do believe we are taking all due effort to provide assistance to homeowners, and I do not believe I've been authorized to use taxpayer money for a general program of principal forgiveness," DeMarco told lawmakers.

According to the person familiar with California's investigation, the central question posed by the California investigators is: To what extent did the two mortgage giants contribute to the foreclosure crisis in California?

Fannie and Freddie hold a vast number of loans in California. The major banks that are employed to act on their behalf — collecting payments from borrowers, foreclosing or evicting borrowers or striking deals with homeowners to modify their mortgages — must adhere to their guidelines.

Harris has made investigating the foreclosure crisis and mortgage meltdown a priority during her first year in office, creating a Mortgage Fraud Strike Force this year. More recently, she has stepped out of negotiations with the nation's five largest banks, conducted on behalf of state attorneys general across the U.S., saying that the banks were asking for too much legal release in return for too little aid to California borrowers.

The subpoenas, issued Tuesday, deal only with Fannie's and Freddie's activities in California. But the investigation could lead other states to look into the firms' operations, said Guy Cecala, publisher of Inside Mortgage Finance.

"If for some reason California would be successful in any of this, it certainly would encourage other states to go after them because every state has Fannie and Freddie mortgages," Cecala said.

The two mortgage giants are responsible for about 40% of home loans in the U.S., according to Inside Mortgage Finance.

"I think that this is at least partially an attempt to penetrate that bubble which is hanging over half the market," Cecala said. "The servicers, the big banks they are dealing with and negotiating with, have no control over the loans that are guaranteed and effectively owned by Fannie Mae and Freddie Mac; the major banks are just third-party contractors when it comes to those."

Copyright © 2011, Los Angeles Times

Housing: A time to buy

This is a very informative and thorough article about the state of the housing market. It is a bit lengthy but well worth the read. Please click here to read "Housing: A time to buy" written by Dr. David Kelly and David Lebovitz

Sales in Santa Barbara - October 2011

Carpinteria 

(REO)$185,000 4634 Ninth St 

$192,000 5951 Birch St 1 

$200,000 5936 Birch St 1 

$203,000 7015 Gobernador Cyn 

$282,000 6048 Jacaranda Way F 

(REO) $350,000 1260 Franciscan Ct 11 

$385,500 1413 Sterling Ave 

$420,000 1484 Noma St 

$520,000 4655 Aragon Dr 

$615,000 1098 Linden Ave 

$645,000 1477 La Jolla Pl 

$1,100,000 7410 Shepard Mesa Rd

$424,792 Avg. Price
$367,750 Median Price 
12 Sales

Goleta  

(REO)$210,000 31 Dearborn Pl 34 

(REO)$230,000 5516 Armitos Ave 79 

$258,000 7105 Monique Ct 

$300,000 6864 Silver Fern Ct 

$325,000 7636 Hollister Ave 259 

$363,000 534 Mills Way 

(REO)$380,000 7017 Marymount Way 

$425,000 107 Cardinal Ave 

(REO)$460,000 688 La Roda Ave 

(REO)$474,000 581 Poppyfield Pl 

$480,000 5134 Calle Real B 

$520,000 6245 Momouth Ave 

(REO)$525,000 62 Touran Ln 

(REO)$545,000 121 Santa Ana Ave 

$557,000 523 Inwood Dr 

(Reo)$632,000 7952 Winchester Cir 

(Reo)$635,000 5155 Tabano Way 

(Reo)$650,000 7938 Winchester Cir 

$660,000 7319 Greensboro St 

$687,000 5083 Parkwood Pl 

$715,000 5304 Orchard Park Ln 

$740,000 4976 La Ramada Dr 

$750,000 5133 Walnut Park Dr 

$825,000 6828 Shadowbrook Dr 

$830,000 455 Orange Blossom Ln 

$930,000 6784 Sueno Rd 

$1,048,000 416 Mills Way

$561,259 Avg. Price 
$545,000 Median Price 
27 Sales

Montecito

$253,000 1125 Westmont Rd 

$792,500 755 Circle Dr 

$890,000 1355 Santa Clara Wy 

$944,000 696 Cowles Rd 

$1,060,000 116 Palm Tree Ln 

$1,200,000 1368 East Valley Rd 

$1,200,000 677 Orchard Ave 

$1,550,000 950 Arcady Rd 

$2,210,000 660 Randall Rd 

$2,300,000 433 Alcala Ln 

$3,300,000 275 Olive Mill Rd

$1,427,227 Avg. Price
$1,200,000 Median Price
11 Sales

Santa Barbara

$198,500 220 W Canon Perdido 

(REO)$313,000 325 Ladera St 4 

$325,000 1233 Richelle Ln G 

$331,500 2113 Castillo #A 

$340,000 1231 Stonecreek Rd D 

(REO)$365,000 3663 San Remo Dr #5a 

(REO)$375,000 1305 Cacique St 

(REO)$375,000 2626 Calle Real 

$380,000 551 E Montecito St 

$380,000 557 E Montecito St 

(REO)$383,000 1600 Garden St 18 

$395,000 577 E Montecito St 

$401,000 1709 Sycamore Cyn Rd 

(REO)$405,000 433 E Micheltorena St 

$410,000 535 E Montecito St 

(REO)$425,000 431 E Carrillo St 

$426,000 565 E Montecito St 

$445,500 579 E Montecito St 

(REO)$460,500 3943 Camellia Ln 

$470,000 1010 N Nopal St 

$475,000 222 Reef Ct 

$483,500 452 Fellowship Rd 

$485,000 221 Reef Ct 

$485,000 2824 Miradero Dr 

(REO)$485,000 418 E Sola St 

$487,500 573 E Montecito St 

$540,000 818 W Mission St 

$560,000 823 Alberta Ave 

$600,000 3508 Madrona Dr 

$600,000 2525 State St 23 

(REO)$605,000 305 Sherwood Dr 

$615,000 202 San Nicolas 

$638,000 515 W Quinto St 

$682,500 227 Los Alamos 

(REO)$690,000 832 Vales St

$715,000 4004 Via Lucero Unit 4 

(REO)$715,000 3997 Foothill Rd 

$717,000 1127 Bath St 

$730,000 1576 Eucalyptus Hill 

$736,000 342 Oliver Rd 

$740,000 521 Carriage Hill Ct 

$745,000 4018 Via Diego 

$750,000 7 St Ann Dr 

$750,000 316 W. Ortega #3 

$753,000 1132 Crestline Dr 

$775,000 1424 Pacific Ave 

(REO)$777,000 218 Las Ondas 

$780,000 3124 Argonne Cir 

$798,500 1109 Las Olas Ave 

$858,000 764 Casiano Dr 

$867,000 1609 Garden St 

$880,000 3677 Eileen Way 

$895,000 4868 Vieja Dr 

$987,000 3752 Lincoln Rd 

(REO)$1,050,000 2020 Las Canoas Rd 

$1,100,000 958 Arbolado Rd 

$1,220,000 3084 Calle Mariposa 

$1,250,000 707 E Valerio St 

$1,379,000 1635 Oramas Rd 

$1,400,000 1717 Mission Ridge Rd 

$1,500,000 2660 Puesta Del Sol 

$2,059,000 100 E Constance Ave 

$3,580,000 1709 Overlook Ln

$720,113 Avg. Price 
$610,000 Median Price 
63 Sales 

Summerland 

$388,000 3960 Via Real 

(REO) $500,000 2576 Lillie Ave 

$3,415,000 745 Sand Point Rd 

$1,434,333 Avg. Price 
$500,000 Median Price 
3 Sales

Total:

$739,621 Avg. Price 
$610,000 Median Price 
116 Sales 
24% Reo Sales

Top 20 New-Wave Foreclosure Markets

October 24, 2011
By Daren Blomquist, Director of Marketing Communications

After five straight quarterly drops, default notices that start the foreclosure process increased 14 percent nationwide from the second quarter to the third quarter of 2011, signaling that another wave of foreclosure activity is beginning in many parts of the country. Although this wave will probably not crest as high as the foreclosure wave of 2007 to 2010 that resulted in more than3 million borrowers losing their properties to foreclosure, it comes on the heels of a temporary lull in foreclosure activity caused by foreclosure processing delays over the past year.

This new wave of foreclosures is hitting some markets particularly hard. Below are graphics showing the 20 markets nationwide with the biggest quarterly increase in new foreclosure starts in the third quarter.

Check the foreclosure trends in your area in our Foreclosure Stats & Trends Center, or find new foreclosure properties in your neighborhood with our free nationwide foreclosure property search.

*Click on the images below to enlarge.

Stronger Total Sales Numbers in 2011

September statistics, as well as the first half of October, have confirmed that our local market is slowing down.  We have had to deal with not only seasonal factors, but also the impacts of the lowering of the confirming loan limit, which hits at the heart of our 1st & 2nd time buyer market.  There are two considerations when evaluating the market, prices and strength in number of sales.  We had a great summer when considering number of sales.  Pricing continues to be under pressure.  We continue to find that 50% of our sales of single family homes are under $800,000 and 60-65% are under $1MM.  Please read the "Political Risks" section below to understand my view as to what is critically needed to get us out of this mess. This months newsletter will focus on: 1. Analysis of Closed and Pending sales for September as well as for October 1-19.   2.  Nine months statistics detailing the makeup of the local Starter Home market.   3. A more detailed view into the makeup of sales in the Mid-Range market for last seven months.  4. A continuing analysis of Pending Sales.   5. Investment property analysis.  6. Continuing analysis of condo market which, after picking up in last 3 months is now softening again.  7. An analysis of how each segment of the market is doing.  We have to remember that we do not correctly answer the question of "How is the Market Doing" if we only give generalized overall answers.   Current Statistical Data All segments of the local market are slowing down.  The number of listings of single family homes has not really slowed, going to 557 from 564, 574 & 565 previously.  Last year listing peaked at 678 in July and dropped every month thereafter through December.  This year we have been looking at 84.66% as much inventory starting the summer but, instead of decreasing the number of listings has been stable as you can see.  So we now have 89.12% as much inventory as last year at this time.  Still, we continue to have stronger total sales numbers in 2011 with less inventory.  With condos we now have 137 active listings down from 139, 153 & 170 previously.  We had 156 at this time last year.  We actually began the summer with more listings this year than last last year and we still have not caught up to the total sales as of this time last year.  Houses are stronger in number of sales, condos are the same, but realized prices are under pressure in both markets. Closed Sales -  Closed sales came in at 85 for September, down from 96 and 94 the previous two months.  These closed sales came in at 93.56% of List Price & 87.54% of Original List Price which is essentially equivalent to recent months.  The Median Sales Price jumped back up to $800,000 which is closer to the average median sales price of $815,000 for the first nine months of this year compared to the $734,500 value for last month.  The Average Sold Price was $1,178.497 down from an average of about $1,230,000 the last three months.   How did median price rise and average price fall for the month?  The short answer is that there were fewer lower price sales and fewer high end sales.  Looking into October we have 44 closed sales thru 10/19 so things look to be slowing further.   Market Share Analysis:  Here is a look into the number of sales and percentages broken into price ranges:    Price Range       Oct. 1-19      Sept.       August        July            June            May   Under $800,000   50%(22)    49%(42)    56%(54)    48%(45)     38% (34)     51% (46)  Under $1MM       66%(29)    62%(53)    70%(67)    58%(55)     61% (54)    60% (54)      $1MM-2MM        23%(10)    27%(23)   18%(17)    31%(29)      28% (25)     22% (20) Over $2MM          11%( 5)    11%(  9)    13%(12)    11% (10)     11% (10)     18%(16)      Total Sales            44              85              96               94              89                90           October so far is mirroring September although with lower total numbers.  The $1MM-2MM price range has become stronger relative to the other ranges but not really in itself.  It is more about fewer lower end and high end sales and almost no sales over $5MM.  We have to remember that normal expectation would be for a slowdown moving into the holiday period.     Low End Sales Data (Under $800,000) - Entry level sales are definitely slowing down. Question is whether it is part of overall market slowing that is seasonal or not seasonal or at least partly due to fewer homes selling due to lower FHA loan limits.  The low end is still the strongest part of our market.  It is good news that the Senate has passed a new law again taking the limits up to $729K.  We will have to see if the House will also pass this or, alternatively, that the politics of weakening the current administration is more important than working to improve the economy and housing.  Below you will find an analysis of the last nine months activity which creates an average of 47.56 homes sold per month in this segment of the market. We currently have 142 active listings in this price range down from 148 last month and and average of 147 over last five months.  This creates between 3.1-3.5 months standing inventory.  This part of the market has been looking at these same numbers for at least six months.  Normally so little inventory would create increases in price but in this market the prices have declined this year due to the continual addition to inventory of REO and short sale properties. Sellers and agents know that buyers will act aggressively but only if the pricing is exciting to them.  As I have stated for months now, unless and until the powers that be respond by offering alternatives to underwater owners besides short sales and foreclosure, we will continue to have declining prices.      SEPTEMBER 20-OCTOBER19 - Sold Properties under $800,000                    1-15 days     16-30      31-60     61-90     91-180     over 180 days   TOTAL   #of prop:           16               6          11            6           3                -                        42      # short sale          3               1           2             -            -                -                          6     #REO                  5               1           2             2            1               -                        11   # w/price chg      2                2           7            4            3                -                       18     AUGUST 20-SEPTEMBER 19 - Sold Properties under $800,000                    1-15 days     16-30     31-60     61-90     91-180     over 180           TOTAL  #of prop:           15               7            8            3             8                4                      45  # short sale         5                -            3            1             -                 1                      10 #REO                 3                3            2            1            3                 1                      13 # w/price chg     -                 -             4            2            8                 4                      18 JAN 19-AUG 20 - Sold Properties under $800,000                     1-15 days     16-30      31-60     61-90     91-180     over 180 days   TOTAL #of props:        105            42          57           46           59               32                    341  # short sales     19               4          13           11            12               18                      77   # REO              23             13            8           17            14                 2                      77      # w/price chg     1               6          36           39            57                26                   165                          The data shows that: 1. As we now see month after month, bank-owned and short sale properties continue to make up around 45% of the sales in this part of the market.  The 6.25% loss in value thru August this year in this part of market is due to this continuing problem.  2. In last two months more REO properties are closing than short sales.  3.  72% of all listings were into escrow within 60 days in last two months compared to 60% in the first seven months of the year.       Mid Range Sales Data - 35 properties closed in last 30 days in this price range up from 28 and 24 previously and closer to the 44 and 35 in June & July that caused me to start hoping that this critical segment of the market was waking up.  Lets keep our fingers crossed that this segment continues to show strength.  We do continue to see short sales and now REO properties cropping up in this price range.  They are a bit harder to track but at least 6 of the 35 sales last month were either short or REO.  This is starting to become a significant factor for this segment of the market.  There are currently 171 active properties in this price range down from 178 last month and 191 & 198 previously.  If we can stay above 30 monthly sales this segment can come into balance as long as we do not continue to get more short sale and REO properties.    SEPTEMBER 20-OCTOBER 19 - Sold Properties $800,000-$1,600,000                     1-15 days     16-30      31-60     61-90     91-180     over 180 days   TOTAL   #of prop:             8           5                9             3             5                  5                    35      # w/ price chg     -            1                8             1             5                  5                    20       MARCH 20-SEPTEMBER 19 - Sold Properties $800,000-$1,600,000                     1-15 days     16-30      31-60     61-90     91-180     over 180 days   TOTAL   #of prop:           52            14           25            16            44                22                  173        # w/ price chg     -               2           11              8            33                20                    78      Pending Sales -  Pending sales (properties going into escrow) dropped dramatically in September to 79 from 111 in August and 96 & 113 previously.  The Median List Price for the new pending sales also dropped dramatically to $729K and Average List Price to $1,050,312 which was quite a drop from $$1,220,881 previously.   We do have 56 pending sales in October thru 10/19 which does show surprising strength and the median list price for these is up to $807,500 from $749K previously.  This is good news.  Also 23 of these were in the Mid-Range that is critically important to our market. Total pending sales now total 168 compared to 173, 176, 190 & 191 previously.  We continue to have an orderly market with less than 20% of pending sales taking more than two months to close.  We do continue to lose approximately 10% of pending sales to fall through escrows.   Additional pending sales information:     PENDING SALES - Oct. 19       under $800K     $800-1M     $1-2MM     over $2M        Current total pending  (168)            104                   23                27               14      Avg. monthly sales (last 5 mths)     44.2                10.4               22.8           11.4      # months inventory over 5 mths      2.35                2.21              1.18            1.23      # months inventory(Sept. figures)   2.47                2.55              1.17            1.57 PENDING SALES - Sept. 19       under $800K     $800-1M     $1-2MM     over $2M       Current total pending  (173)            100                   22                36               15      Avg. monthly sales (last 5 mths)     41.8                12.0               22.0           12.2      # months inventory over 5 mths      2.39                1.83              1.64            1.21      # months inventory(Aug. figures)   1.85                1.69              2.11            1.25 PENDING SALES - Aug. 19       under $800K     $800-1M     $1-2MM     over $2M       Current total pending  (176)              94                   30                 39               13      Avg. monthly sales (last 5 mths)     40.6                10.4                22.2           12.4      # months inventory over 5 mths      2.32                2.88              1.76             1.05      # months inventory (July figures)    2.10                3.00              1.34             1.3    This information shows that the there is a build up of inventory in the entry level and not much inventory of pendings between $1-2MM.  Given the increase in recent pendings in the $1-2MM range this should come back to balance.   It will be interesting to how the current pending clear in next month as and if the new pendings decrease as we slow down.     SUMMARY (for single family homes) -  Remember that when we look at our market we need to look at strength of sales both in terms of numbers and prices.  Santa Barbara had a good summer sales season in terms of number of sales and, although now weakening, it is still good for this time of year.  We have reasonable levels of fall through escrows.  The problem is that realized prices are not at all exciting.  My analysis in August showed that all segments are either flat or falling in realized prices through the first eight months of the year.  Buyers still rule but agents and sellers have responding generally by listing the majority of properties, especially in lower price ranges, aggressively.  Investment Properties -  We only have 42 active properties down from 46 last month and 44 previously.  This market continues to be active with many more buyers than sellers.  There are 17 pending properties with 12 of them going into escrow since 9/20/11.  We have had four new escrows close in last 30 days.  The combination of strengthening rents and great interest rates make any reasonably priced property pencil out.  The low end of this market continues to be mostly short-sale & REO properties.  We need more inventory.   Condo market -  There were 39 closed sales and 32 pending sales in September which continues about three months of good news after a miserable first half of the year.  So far in October there seems to be a slow down with only 14 closed sales and 14 pending sales through 10/19.  In the last 30 days through 10/19 we find 37 closed sales but only 20 pending sales.  The median price for September sales was $445,000 and is $435,000 for those that closed in last 30 days.  The average median price for the year now stands at $425,000 which is 2.75% below 2010 & 8.99% below 2009.  It feels like this market is trying to make a bottom price-wise.  It also looks like this market is also slowing considerably as we move towards the holidays.  We will know by next month.  HOW IS THE MARKET DOING?  -  I am asked this question all the time.  We actually have many markets.  Here is a quick synopsis of the various markets as I see them.     Entry Level Properties: (under $800,000) - There are currently 142 active listings which is close to the average of 147 for last five months.  Sales are steady through September but slowing now.  There is 3.5 months inventory at this time at most.  Currently this portion of the market accounts for over 50% of all sales.  Pricing has fallen 6.25% through first eight months of the year but feels even weaker.  This is still the most vibrant part of our local market in terms of number of sales.  Mid Level Properties  ($800,000 to $1,600,000) -  This part of the market had weakened the last two months but is showing more strength in last 30 days.  We are again below the monthly numbers needed to bring this market into balance.  There are currently 171 active listings, down from 178 & 191 previously.  There is about 5-6 months standing inventory.  We actually have stable realized prices in this range but increasing short and REO sales which will not bode will if it continues because it will drive pricing down.  High End Properties ($1,600,000 to $3,000,000) -  We had 7 sales in September down from 9, 12 and 10 previously and ONLY 3 so far in October.  There are currently 125 active listings compared to 126, 118 and 125 previously. We have 12 pending sales currently.  This market still has way too much inventory and sales continue to decrease.  Realized prices are somewhat stable.  Luxury Market  (over $3,000,000) -  There were 6 sales in September compared to 6, 6 & 3 previously and 4 sales so far in October.  There are 137 current listings compared to 144, 148, 148 & 145 previously.  There is a total of 8 current pending properties.  Average Sales Prices have fallen over 19% this year but this is due to fewer higher priced properties selling and there have been a few large transactions that did not make the MLS.  The numbers are not good fore either sales or prices.  POLITICAL RISKS - We have to fix housing!  Hopefully Congress will a correct the mistake of lowering the conforming loan limit to $625,500 which began October 1.  This change actually began having its effect as of around the middle of August because buyers had to make offers based on what loan limits would be at time of closing.  The Senate has passed a bill on Oct. 20 that takes the limit back up to $729,750 but, as of this writing, the House has not followed.  I cannot for the life of me understand the thinking that led to lowering this limit.  The higher limit is important in stretching the purchase price range for buyers with 3.5-10% down payment.  In other words homes priced from $648,186 to $810,833 become unattainable for anyone who does not have the "normal" 20% down payment when the limit is lowered.  Also adding to the problem is that jumbo loans (now over $625,250 instead of $729,750) require even stiffer qualifying standards on top of a minimum 20% down payment.  Rates are higher as well because the jumbo loans are not guaranteed to be purchased and uncertainty creates higher risk which creates higher rates and more rigorous underwriting.  Simply said, it becomes more difficult to find a qualified buyer and to get an approved loan which has a negative impact on this part of the market which, in Santa Barbara, is within the heart of the 1st time and 2nd time buyer's market. In my view at least equally important is the need to fix the mess with underwater home owners.  Unless and until the government and Fannie & Freddie finally realize that housing will not turn the corner until this problem is solved we will be looking at weakening prices and more owners becoming renters after losing their homes.  I have heard more discussion focused on this problem lately but only time will tell if any progress will be made.  Distressed homeowners need to have their loans reduced to amounts in line with current market values and they need to be offered this option without having to qualify as long as they are current in their payments. The biggest risk remains to continue to do nothing other than to cut costs which, like I mentioned last month, is akin to bleeding a patient in order to cure them as was prescribed in the middle ages.  We all now know that bleeding the patient only weakens him and only worsens his situation.  One can say many things about the "Occupy Wall Street" group but, unless we the people rise up, we will continue to be run by the small percentage who now rule us all on the basis of their own self-interest and profit.  We can hope that the election of 2012 will be about this but that will mean at least another 15 months of real pain before any real change can be enacted and, only then, if the people are not again misguided by the power of advertising in the hands of the corporations.   Housing values in Santa Barbara and all of the country will not improve until the problems mentioned above are corrected.  By: Don Elconin