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-San
Bernardino area remains the 3rd highest in the nation for foreclosure activity. I cringe when I see these kinds of
articles because while the underlying report data is accurate, the reporter, who typically knows nothing about real
estate, has no idea what the data means. Their summaries are often misleading to their readers causing
unwarranted 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 sound
pretty 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 the
article 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 back
that we were among the top three in the nation with Sacramento and Stockton (which still rank #1 & #2). But
rather 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 are
down 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 only
number that bumped up slightly in June was Notices of Default (NOD), which were up 3% (68 to 70). As you’ll see
in a later chart, bank-owned homes as a percentage of our market has continued to decline to just 7% of our active
market 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, banks
may finally be starting to move more aggressively on properties that have been in foreclosure for 1, 2 or 3 years
with people living rent-free. The banks are tired of waiting as are the rest of us. We’re also seeing a slight up-tick in
foreclosure activity on homes that were granted loan modification 2 – 3 years ago but have subsequently fallen
back into foreclosure (over 60% do).
Second, counteracting the increased foreclosure activity is an apparent willingness and/or ability of banks to
successfully complete short sales. Maybe they finally figured out they make more money on a short sale and that
it’s less deleterious to the market. Rising median prices also means fewer people under water which means more
people able to refinance at today's 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 still
being affected that’s not great. Compared to North Dakota with just 3 foreclosures in the whole state and a ration
of 1 in 105,833 homeowners in default, we look pretty dismal. But we’re still selling homes at a record pace this
year and our prices are inching up. Compared to where we were four years ago, or even a year ago, we’re headed
in the right direction.
RealtyTrac publishes a great little ‘Heat Map’ showing foreclosure activity by zip code for any area of the country. If
you’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 Homes
200 Unit Sales
150
100
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 MKT
Temecula 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%
Regional
Average 578 62% 334 45% 73 7% 142 22% 171 19% 227 30%

4. California Real Estate Trends
250,837 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.