Lake Forest Market Report – June 1, 2008

Based on the levels of inventory, it looks like we are shifting back toward a seller’s market in Lake Forest! When the ratio of active listings to sales, or new escrows gets down below 6 months, it has generally been considered a market that favors sellers.  This doesn’t mean that prices are likely to rise soon, but that it is more likely that a buyer will take action sooner when a well-priced property comes on the market.

While there are still many bank-owned homes coming on the market, many seem to be getting more agressive with the pricing right from the start.  There are now 38 active REO listings, 53 REOs in escrow, and 25 that have closed in the last 30 days.  Assuming an average escrow time of 6 weeks, the 53 properties in escrow, indicate a pace of about 8.5 sales per week.  At that rate, the 38 actives would be gone in less than 5 weeks, if no new ones came on the market!

The short sales are the hardest to evaluate due to the fact that each seller, lender, and listing agent is unique. Many of the currently listed short sales will not qualify due to some circumstance of the seller, and will eventually become foreclosures.  Many of the listing agents who take the short sale listings are unqualified, and don’t really understand the process.  Most of the lenders are understaffed and overwhelmed, and not capable of responding to the best offers in a timely manner, so many of the buyers who made offers on these homes will drop out or buy something else by the time the lender makes a decision.  At this time, there are 148 properties listed as active short sales in the MLS, with 30 currently under contract, and only 7 that have closed in the last 30 days.

For homes that are neither bank-owned or short sale status there are a total of 135 on the active market, with 42 in escrow, and 20 that have closed in the last 30 days.  The active inventory ranges from $179,400 up to $1.8 million, and the average is $635,000. For those that have closed or are currently in escrow, the time on the market is an average of 60 days.  (Hint: if your home has been on the market for over 60 days without an offer, take a hard look at your price!)  For “non-troubled” homes, the inventory is very thin in many size and price ranges.  I just witnessed a home that became available on Friday afternoon, with instructions that it could be shown beginning Saturday morning, and by Sunday morning, the status had changed to “Pending.”  In my opinion, this was priced right at the level that the market now dictates – not the “testing” end, or the “give-away” end, but right where it attracted attention from the buyers who were ready to act.

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