Realty Trac is a service that tracts homes that are in default as well as those that have been foreclosed. The homes in default have about a 10% rate of actually getting foreclosed overall for the bay area. This percentage may change in the future. According to MLS which has all homes for sale through realtors but not FSBOS there are 144 single family homes and townhomes for sale in Palo Alto. This does not include East Palo Alto. Of these 144 homes 2 are bank owned and one is a short sale. Over the last year there have been 6 closed short sales out of 481 total sales and 4 closed REO sales out of 481 sales. Obviously these numbers do not support the idea that Palo Alto has been effected by distressed property sales, as of now. What will happen in the future is not entirely clear, especially with the problems banks are having in other states with title issues. There is a big push for loans to be modified or homes to be sold short when owners can not pay their mortgages. My guess is that the number of short sales will increase but I doubt that foreclosures will have a huge spike in numbers in Palo Alto any time soon. That is not to say that the irrational exuberance in many of the Palo Alto sales right now will continue, but the effect of distressed properties does not seem to be a big factor here.
Link below... good luck!
The question of whether appraisers take distressed sales into account when comping current (non-distressed) inventory is an interesting one. I've seen it done both ways. I can say that many of the distressed properties have been beaten with an ugly stick (everything from deferred maintenance to appliances and fixtures literally being ripped out of walls and kitchens). In most cases, my opinion is that distressed properties don't make for good comps with non-distressed properties. There really is a significant difference in quality and liveability most of the time, and distressed properties often need a significant cash infusion just to become habitable again.
There are all sorts of issues involving lending and appraisals right now that (again, my opinion coming) have had a severely negative effect on the housing market. Rather than fix the problems that existed previously, we've just changed them out for a new set of problems. Sometimes, this works in our favor (we represented one buyer where the bank/seller insised that we lower the purchase price by 25% because their appraiser was clueless) but more often they are a source of frustration or at least anxiety. We try to resolve most of these issues behind the scenes because the home buying/selling process is stressful enough on people without adding lender headaches.
One last note before I just back out of this discussion - from what I hear, the situation is slowly improving but it is still often necessary to fall behind on your mortgage payments in order to get your loan mod application noticed! This further clouds the distressed property picture. Remember, just because someone is behind on their mortgage payments does not mean that they are even thinking about selling their home. It could just be a strategic play or a temporary problem.
Let the debate continue...
When you ask for 94301 it shows you foreclosures for that zip code and all neighboring areas. If you use the map view, you obtain the following:
94301 15 foreclosures, not including any east palo alto properties
94306 34 foreclosures
Having a level of distressed properties that is on par with sales inventory should have a great impact on sales.
Also palo alto does not hold its value in a vacuum. If neighboring menlo park and mountain view also have distressed sales, they will in turn depress the local market, making Palo Alto appear more expensive by comparison.
I think CP's original question has merit as the level of distressed sales equals present inventory.
Do realtors see this when appraisals are ordered for upcoming sales? Thus are distressed sales used in bank assessment of property values prior to issuing a loan.
You ask why realtors don't see a big relationship between published data and the future of the market. I'm a realtor and here's my reason: market data is trailing edge information that describes what happened before, predicting the future of any market is based upon current data plus a magic ball. While many realtors and other business consultants usually start their predictions with the disclaimer "I don't have a crystal ball..." or "past performance is no guarantee of future results...", professionals who want you to bet your money on real estate or any other investment are asking you to take a risk based upon their belief in what will happen in the future. Those recommendations are (usually) based upon market analysis past, present and... ok, no one can predict the future with 100% accuracy, but those who sell their opinions for cash should have a good batting average. Some realtors, like me, offer both broker and consulting services based upon our ability to pick future winners most of the time. Sometimes market data weighs heavily in a prediction of future activity, but in a maket that is doing things it hasn't done for a long time, a crystal ball is a handy tool. My crystal ball is made out of high quality glass, sweat, and hard work.
I was curious, so I typed in 94301. Under the Foreclosure tab, it says there are 322 properties. Now that would be interesting - BUT, if you look down the list, only the first 5 shown have a zip of 94301. A relatively small heading then appears that says "Properties Near 94301". Guess what, the zip codes then start jumping all over the place with East Palo Alto having a strong presence.
As for the "Palo Alto" search, Marcy takes the time to spell out that 94303 spans both Palo Alto and East Palo Alto - and RealtyTrac seems to find that a good enough reason to include all properties as 94303 in the Palo Alto search. The numbers are skewed by this. Now you have to either know where certain streets are or start mapping! It is not enough to assume that the indicated city is accurate.
I stand by my earlier response. By the way, I DO think distressed properties will continue to have an impact on prices, but this thread had at its foundation an erroneous premise. The number of distressed properties in Palo Alto (the Santa Clara County city) is not nearly as great as indicated, and therefore the impact on prices isn't nearly as threatening.
BTW, I have a good friend that lives in East Palo Alto, and he has told me before that I can omit the "East" in his address and mail will get to him just fine. Doesn't make him a Palo Alto resident though.
You are mistaken. Realtytrac does distinguish between palo alto and east palo alto. There are 189 preforeclosure and over 160 properties in auction or reps in east palo alto.
Again, all the addresses listed as distressed foreclosure in palo alto are indeed located in palo alto.
Why is that realtors don't think this will have any impact on sales?
Again are these numbers simply wrong. Someone please provide a link with information to the contrary.
Also, of the homes that are REO's that sold in PA in 2009 none were sold at rock bottom prices for the condition they were in. For example, there was a foreclosed home on Harker that listed just over $1,800,000. There were 13 offers and my client got it for $2,060,000. That was a good price, but certainly did not lower the value of other homes in the Community Center.
So, that is why I think that the value of the lower end of the PA market will not be depressed by the current homes in default.
Eye balling it, it looks like the VAST majority of properties listed are in East Palo Alto. These shouldn't have a very significant drag on the home values in Palo Alto.
To get a better idea of what is happening, you'll need to take a closer look at the addresses. Palo Alto itself is not immune, but the situation is not nearly as bleak as the overly generalized numbers appear to indicate.
The link in my original post is broken and does not go to the actual palo alto search. There are a total of 114 homes in either pre foreclosure, auction, or reo. In your estimation, why is it that it won't have an impact on sales under 1.5 million. Most of the distressed listings are in this price range.
Is realtytrac simply wrong in the volume of listings?
If my link does not work, simply go to realtytrac.com and perform a search in palo alto, ca. You don't need an account to see the aggregate results.
Depending on your market segment, my advice would be to talk with a professional because lumping the media and statistics into one doesn't apply.
It will be an interesting year. I predict the $8,000 tax credit will not be reinstated again, interest will go up, more inventory will come on the market, and we'll see banks working out alternative solutions to their borrowers, perhaps rent to own or equity share (it's a wild guess on the latter). We shall see.
Yep few if any foreclosures in Palo Alto California.
I agree - upper range above $2M still soft, below $2M more solid and I would say under about $1.2M market is strong. A buyer below $1.2M in Palo Alto, CA should be ready for some competition.
Your search returned homes for Palo Alto, Iowa, not Palo Alto Ca. so the numbers you just gave do not apply here.
As far as foreclosures in Palo Alto, there were only 4 single family homes in Palo Alto Ca that were bank owned that were sold in 2009. I do not expect that to increase much, if any in 2010. Overall foreclosures have slowed down, not speeded up. My expectation is that there will be more short sales, particularily in the upper end, in 2010, but not a wave of foreclosures. there are many reasons for this but the summary is the lower end, ie under 1.5 mil in Palo Alto is very active. Homes over 2.5 are not selling well. Banks are getting financial incentives to allow short sales and loan mods rather than foreclosures. Homes that are foreclosed are being released very slowly by banks, probably to keep prices stable.
So, I think the upper end is still in for more depreciation, maybe 10%, but I think under 2 million is PA is stable. For right now.