Foreclosure Sales Affect Real Estate Prices

I find statistics fascinating, but “statewide” data, which is how the real-estate market often is reported, is not much more meaningful to me than a statewide weather report.

Today is a glorious sunny day in California … unless it’s raining where you live.

Statewide statistics show a drop in median price over the past four years—most pronounced from December to February. Holidays are one good explanation for this—and that’s certainly part of the reason—but the more direct cause is the release of bank-owned homes into the sales inventory in an effort to get them off the books by year-end.

In 2009 and 2010, the steep month-to-month declines in the median price in January and February were offset as the market moved into the peak months beginning in March and running through the summer. By midyear, the median had returned to the late-season levels of the previous year.

So how does that compare with the trend in Alamo and Danville?  Or other parts of Contra Costa County?

You can see from the chart (at right) that there are similar trends—Q1 and Q4 have lower median prices in 2009 and 2010. But there have been fewer short sales and foreclosures in Alamo and Danville, so the setback is not as severe. 

Here are a few foreclosure facts of note, according to the MLS (based on information from the Contra Costa Association of Realtor's MLS; data is deemed reliable but is not guaranteed accurate by the MLS):

• In Blackhawk, Alamo, Danville and Diablo, there are 381 active listings, 64 of which are bank-owned or short sales (about 17 percent).
• Across the same areas, slightly more than half of the pending sales are bank-owned or short sales. This is not much of an indication, however. Remember that a short sale is not quick ... so those pending sales sit for months, skewing the data.
• Sold this year in the same areas, 82 of the 231 sales have been short sales or REOs (35 percent).
• This is up from last year when 242 of the 987 sales were short sales or bank-owned (25 percent).
• Compare this to Livermore, where 43 percent of the inventory today is bank-owned or short sales, and 50 percent of the sales in 2010 and 54 percent of the sales to-date in 2011 were distressed
• An even more dramatic contrast is Antioch, where 74 percent of the inventory today is bank-owned or short sales, and 72 percent of the sales in 2010 and 78 percent of the sales in 2011 were distressed sales.

You know what they say about real estate: Location, location, location.