Dave Roberts

Yesterday, June 15, 2009, was the start of a new program in California called the California Foreclosure Prevention Act. The main goal of this legislation was to encourage mortgage loan servicers to be more aggressive with their loan modification efforts to try to keep people in their homes. There is an additinoal 90 day period between the Notice of Default and the Notice of Sale in which the lender and homeowner can work out a loan modification. The law was passed in February but is just going into effect now.

There's a lot of confusion in the public about the full scope of what this law really does. I found a great article by David Gibbs, an attorney in San Clemente, California explaining this bill in detail and laying out a great timetable explaining the new process. I'm reproducing his timetable here, but encourage you to visit the original article and get all the details about this new law.

Most of my plant posts are on my sonoma blog site, but the buckeye is interesting and prevalent enough that I wanted to share this with the AR audience. Ohio is the Buckeye state, of course, but buckeyes occur over much of North America. In California we have Aesculus californica, the only native buckeye to the state. It's also called a horse chestnut by many people.

This is a shrub or small tree for the most part, although it can grow to almost 35 feet tall. From my point of view as a frequent driver of backroads the spectacular impression the blooming buckeye makes is its most important characteristic. The flowers are big, abundant, fragrant, and striking against the green foliage of the tree. It's hard to miss these, and most people driving around California this time of year are presented with great displays from these broadly dispersed trees.

The other claim to fame for the buckeye comes from the adaptation to the California climate, More natives can handle the dry weather with their foliage intact, but the buckeye blooms early and loses its leaves before any other trees in the natural landscape. There are whole hillsides that look dead by the end of the summer, but it's just the buckeyes biding their time until they can put on another spectacular display near the end of May and beginning of June.

There's more information about the fish stunning power of the poisonous fruit and the ways the native Americans processed these for food, but you can google that. I just wanted to introduce you to this wonderful tree you may have passed many times, but never known about.

I Want My REO- Updated

I wrote in April (I Want My REO)about the shortage of REO properties for sale in Sonoma County, CA. Many other writers in different parts of the country have noticed the same thing where they work. I just compiled the stats for May and the situation is even worse now that it was in April.

Good News First

Sales are great! At the bleakest moments last year it looked like nobody would ever buy a house again. Those dismal times seem to be past. There are clearly weak segments of the market where I work, and some parts of the country are still waiting for any "green shoots", but I want to be the bearer of glad tidings. Sonoma County residential sales at the entry level segment of the market are very strong.

The chart accompanying this post shows the news in ways that may be clear to other real estate professionals, but are not at all clear to first time buyers. So let me spend a minute explaining the chart. Bear with me or skip ahead if you don't need help with charts.

The top line represents REO properties, both single family homes and condos, that sold in May. 187 is the actual number It represents roughly six homes absorbed per day for the month. That compares to 134 REO sales last year for the same time period, so the volume is up almost 50% compared to a year ago.

The second line down is for pending REO sales. These are pretty firm transactions since the buyers have removed their inspection contingencies. There are 87 in this category and if you add them to the sales number you have 274 transactions that are either closed or near closing in the last month.

The third line looks as firm as the others, but it's the most hard to pin down. These are contingent REO sales and they often move back into active status. Many statistical programs consider them to be active, but if you are an eager buyer you will find that trying to purchase a property that is already contingent is a mainly futile exercise. I don't have any firm numbers for how many of these sales progress to pending and then sold, but I think most of them do. For our purposes I am going to consider them mainly sold.

The final line, Active, is where all real estate buying takes place. Properties are listed, agents show them to buyers, offers get written, and if you're lucky, your offer gets accepted. Then it can move from Active to Contingent. All the upper lines represent frantic paperwork, inspection, and appraising activity, but that work is taking place for homes that are already off the market, so from a buyer's point of view the top three lines don't matter.

You can see that there are less than 140 REO properties available to purchase. Almost twice that many are in sold or pending status in the last thirty days, so that's less than half a month's supply at today's absorption rates.*

There are several key term to keep in mind for the active listings represented by the bottom bar:

*Absorption Rate - how long does it take to clear the homes off the market at the current buying pace.

Seller's market - when sellers get multiple offers for a property. Offers are frequently for more than the asking price.

Buyer's market - little competition for property. Buyers have their choice of properties and can dictate terms including lower prices, more repairs done by sellers, and other concessions from the sellers.

Inventory - What you can actually buy, i.e. there's a for sale sign on it.

What the chart tells us very clearly is that there is very little inventory, the absorption rate for REO listings is extremely high, and that we are strongly in a seller's market. What this chart doesn't tell you, but I will, is that the buyer's market from January and February of this year is gone.

I will write in future posts about a potential surge of new foreclosures coming to the market. There are clearly foreclosures happening again, but it's too soon to tell what the balance will be between buyers and sellers. For now, sellers rule. I have some additional information about Sonoma County REO Days on the Market and sales prices relative to listing prices on my reo.sonoma.net blog.

We get a lot of out of town buyers at our Healdsburg Sotheby's International Realty office. Many come from cold weather states where spring is a short season between too cold and too hot...and bugs. One of my joys as an agent is sharing stories about gardening in this land that Luther Burbank celebrated as "the chosen spot of all this earth as far as Nature is concerned".It's not a hard sell to talk about gardening in January; wearing shorts.

These thoughts about gardening as a key reason to relocate to this area came to me as I was walking past some of my fragrant plants and got a cinammon burst from some purple petunias. I've got alyssum and petunias in planter boxes along my entry walk and it's a great feeling to inhale their scent as I pass by. It's a lot easier to stop and smell the roses (or other great plants) when you have roses where you can smell them.

My garden is full of color, but for some reason I noticed how many white flowers were in bloom right now. I've got the usual array of plants, but I have a hawthorn tree with beautiful flowers that are just at their peak. I normally don't put this big an image in my posts, but a lot of readers have probably never seen a hawthorn flower up close. They're pretty spectacular. I like this tree because it's thorny branches keep cats and bigger birds away from my hummingbirds and smaller finches.

The other plants that have been great this spring are the snapdragons. I've had some second year snaps that have grown as big as a small rose bush. They're getting tired and leggy at the moment and I'm ready to retire them until next fall, but I've enjoyed them since January. To all of you Chicagoans and Minnesotans, I'm not kidding. You really can garden in January in Sonoma County.

Three months ago, I ruled the world. My strong buyers could pick up any Sonoma County property they wanted for good discounts off the list price. I still have great buyers, but finding a property to offer on is tough. Harder still is going up against as many as a dozen other buyers...in two days after a listing hits the market. This is going on in many places, but the ground zero for vanishing inventory and a seller's market is Rohnert Park.

A picture is worth a thousand words, but I don't know if that applies to pictures of words. It's the best I can do to show the situation in Rohnert Park, both for REO properties and open market sales. The screen capture below is for a Hot Sheet. For my readers who aren't real estate professionals, the Hot Sheet is a snapshot designed to show what's going on right now. Most often it would be used to see all the new listings in the past day or week. In this case I stretched the Hot Sheet back a full 30 days to look at single family homes under $325,000 in Rohnert Park. I chose the price since several of my buyers want to stay under that number to keep their monthly payments comparable to renting (around $1,500 per month).

The bottom line is that of the 13 listings showing up on the Hot Sheet, ten are contingent sales and three are already gone. Taken. Absorbed. Bought. Ripped from my grasping hands. No leftovers saved for me. None of the houses listed in the last 30 days are available. However you want to put it, the sellers in this market are getting lots of offers and buyers are getting lots of grief. If this sounds like complaining, it is. But I don't really mean it.

In the real world, I loudly celebrate the return of an acutal real estate market where buyers and sellers cooperate to determine fair market values for their property. We haven't had an actual real estate market since the bubble burst and REO properties flooded onto the market in record numbers. Is this seller's market here to stay? I don't think anybody can say for certain, but along with my other posts talking about market bottoms earlier in the year, this is one more confirmation that we are moving back into familiar territory. I think everyone can breathe a sigh of relief that the worst might be over.