The foreclosed home inventory in Lake Forest has been running between 43 and 49 homes for the most of the last year, but today, there are only 33 REOs (bank owned) homes on the market. The majority of them are condos, and the average list price is $318,700 ($232/square foot.) They range in price from $116,600 up to $599,900.
The highest priced REO in Lake Forest today, at $599,900, has been on the market since March, and has had the price reduced twice, but not enough to generate the excitement that would make it sell. Located in a good neighborhood, with 4 bedrooms, a bonus room, and a pool, the price seems ok for the current market, but it is vacant, dirty, and needs just enough work to scare many buyers away. My guess is that it will eventually sell in the $475,000 to $525,000 range.
In the last month, 39 REOs have closed escrow, with 21 of them selling for an average of 6% over list price after only 13 days* on the market! The other 18 sold for an average of 96% of final list price, after 58 days on the market.
* The “days on the market calculation” is often overstated for these properties, because many of them require 7 days of market exposure before they will even look at offers, then they allow another 3 – 5 days for potential buyers to raise their offers to “highest and best.”)
The trustee sales, where lenders actually take back the properties from the previous owners, have slowed considerably in the last 3 months. As an example, a typical schedule will show 135 properties on the daily foreclosure sale list, but at the last minute, only 10 of those properties will actually be sold or taken back, and the rest will be postponed or cancelled.
Of the properties where the foreclosure sale was cancelled, some were refinanced by a new lender, some were sold at a short sale, and a few were brought current by catching up the late payments. The properties that were postponed, are partly due to the new California law requiring lenders to document that they have attempted to work with the delinquent borrowers, or to some institutions being so overwhelmed with bad loans that they just can’t get them all done. (I also believe that some institutions are holding back, waiting to see what the government bailout will do for them.)