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  • 1. No Cause For Concern… Yet.A recent article in a local media outlet featured data from a report by RealtyTrac showing that the Riverside-SanBernardino area remains the 3rd highest in the nation for foreclosure activity. I cringe when I see these kinds ofarticles because while the underlying report data is accurate, the reporter, who typically knows nothing about realestate, has no idea what the data means. Their summaries are often misleading to their readers causingunwarranted confusion and concern.For example, the data shows that Murrieta has 1 home in every 149 in foreclosure for a total of 264 ‘foreclosures’.Temecula was close behind with 258 ‘foreclosures’ and 1 in 152 households, Lake Elsinore had 147 ‘foreclosures’with 1 in 151 households. They then compared our region with the national average of 1 in 686. Makes us soundpretty bad.But while the data is accurate – the media interpretation is not, or at least it’s incomplete.So, as Paul Harvey used to say, “Now, the rest of the story…” I’ll use Murrieta’s numbers, since that’s what thearticle used, but the statistics and comparables are very similar across all markets in Southwest California.First, it’s not surprising that our area still ranks high on the foreclosure scale – after all it was just a few years backthat we were among the top three in the nation with Sacramento and Stockton (which still rank #1 & #2). Butrather than 264 homes going back to the bank as the article intimated, there were just 140 in June for Murrieta,down 43% from last June. The rest are in some stage of the foreclosure process but may never revert to the bank.In fact homes actually going back to the bank are down 68% from last June, 3rd party (courthouse step) sales aredown 22% and cancellations of foreclosure sales by banks are up 17%.Pre-foreclosure delinquencies are down 8% for the region, and Notices of Sales (NOS) are down 28%. The onlynumber that bumped up slightly in June was Notices of Default (NOD), which were up 3% (68 to 70). As you’ll seein a later chart, bank-owned homes as a percentage of our market has continued to decline to just 7% of our activemarket in July. In fact the number of both REO and Short Sales on the market has dropped by half since January.Two additional trends are affecting our market right now. First, after long delays and numerous moratoriums, banksmay finally be starting to move more aggressively on properties that have been in foreclosure for 1, 2 or 3 yearswith people living rent-free. The banks are tired of waiting as are the rest of us. We’re also seeing a slight up-tick inforeclosure activity on homes that were granted loan modification 2 – 3 years ago but have subsequently fallenback into foreclosure (over 60% do).Second, counteracting the increased foreclosure activity is an apparent willingness and/or ability of banks tosuccessfully complete short sales. Maybe they finally figured out they make more money on a short sale and thatit’s less deleterious to the market. Rising median prices also means fewer people under water which means morepeople able to refinance at todays record low rates into more affordable mortgages.So there you have it. Yes we are still #3 in the country for ‘foreclosure activity’ and with 1 in 150 homeowners stillbeing affected that’s not great. Compared to North Dakota with just 3 foreclosures in the whole state and a rationof 1 in 105,833 homeowners in default, we look pretty dismal. But we’re still selling homes at a record pace thisyear and our prices are inching up. Compared to where we were four years ago, or even a year ago, we’re headedin the right direction.RealtyTrac publishes a great little ‘Heat Map’ showing foreclosure activity by zip code for any area of the country. Ifyou’re curious, it’s a great way to spend a little time . Just remember – it’s only tells one part of the story.http://www.realtytrac.com/trendcenter/trend.html
  • 2. 250 Southwest California Homes Single Family Homes200 Unit Sales150100 50 0 3/10 6/10 9/10 12/10 3/11 6/11 9/11 12/11 3/12 6/12 Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake Sales continue to run generally ahead of last years pace. Murrieta and Temecula sales are down from the prior month with Menifee sales exceeding sales in both cities for the month. Median prices are also running generally ahead of last year across the region, up 6% over last July. Temecula has posted 5 consecutive months of $300,000+ medians.$400,000$350,000$300,000$250,000$200,000$150,000 Southwest California Homes$100,000 Single Family Homes $50,000 Median Price $0 3/10 6/10 9/10 12/10 3/11 6/11 9/11 12/11 3/12 6/12 Temecula Murrieta Lake Elsinore Menifee Wildomar Canyon Lake
  • 3. 500 3 3 . . 450 4 7 7 3 3 . 3 2 1 6 400 3 4 6 2 . 8 5 2 7 350 2 4 8 2 . 5 2 0 300 2 3 5 1 1 8 1 1 5 1 250 9 1 8 7 7 . 200 1 5 4 9 1 4 4 1 2 1 3 150 2 5 8 8 7 6 7 6 7 6 5 9 2 100 6 7 4 1 6 0 2 1 1 1 0 2 0 2 2 3 2 . . . . . . 50 7 0 5 2 0 8 5 6 0 On Market Pending Closed (Demand) Days on Market Months Supply Absorption rate * (Supply) Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar * Absorption rate - # of new listings for the month/# of sold listings for the month One reason for suppressed sales numbers in Temecula and Murrieta is because we simply don’t have product to sell. Inventory has dropped 72% since February (2,240/841) Our months supply has dwindled from 4.2 months in January to 1.3 and our absorption rate has ballooned from selling .7 homes for every new listing in January to an average of 3.12 in July. Yes, Wildomar sold nearly 5 homes for every new listing on the market last month. And with pending sales remaining high, that trend will not reverse itself anytime soon. The number of bank owned homes and short sales has fallen by half since January putting more emphasis on standard sales – up to 62% of the active market from 48% in January. Remember those 264 REO homes in Murrieta from Page 1? Well there’s only 25 of them on the market. 152 in Temecula? No, just 14. Where’s the rest? I don’t know. I assume RealtyTrac’s numbers are accurate – I know what our MLS tells me. July Market Activity By Sales Type Standard Sale Bank Owned Short Sale % of % of % of % of % of % of Active MKT Sold MKT Active MKT Sold MKT Active MKT Sold MKTTemecula 171 54% 92 52% 14 4% 31 17% 33 10% 54 30%Murrieta 177 50% 82 47% 25 7% 24 14% 51 14% 65 37%Wildomar 20 74% 19 45% 2 7% 9 21% 5 19% 11 26%Lake Elsinore 67 60% 43 37% 11 10% 33 29% 31 28% 36 31%Menifee 91 60% 85 46% 18 12% 36 20% 36 24% 54 29%Canyon Lake 52 74% 13 43% 3 4% 9 30% 15 21% 7 23%RegionalAverage 578 62% 334 45% 73 7% 142 22% 171 19% 227 30%
  • 4. California Real Estate Trends250,837 Foreclosure Homes | $254,328 Average Foreclosure Sales Price Riverside County, CA Real Estate Trends 24,875 Foreclosure Homes | $207,351 Average Foreclosure Sales Price Images courtesy of RealtyTrac. Click on the maps for more detail.