Folsom Foreclosures Continue To Be Filed

Foreclosures continue to effect our Folsom real estate market.  You will hear some say that the worse is over.  Based on the numbers, and what I am hearing at the national level, probably not.

The graph below shows the past year’s Folsom foreclosure filings;  Notice of Defaults(1st step to foreclosure) and Notice of Trustee Sale(when it is schedule to be sold on the courthouse steps).  As you can see by the numbers, while the Notice of Defaults are down from last month and last year, they are not down by much.  The number of  Notice of Trustee sales, when the home actually is foreclosed are up, both from last month and last year.

Folsom Foreclosure Filings May 2011

The next chart shows the actual outcomes of the Trustee Sale (auction).  The average amount that are foreclosed on in a month here in Folsom is 21(Back to Bank).  You can also see that several are getting sold on the courthouse steps, typically investors and flippers.  And a few each month are cancelled.  This usually means that they may be working out a loan modification or short sale.

Folsom Foreclosure Outcomes May 2011

Recently my short sale manager, who had just come back from a national short sale meeting, (including lenders that attended) gave me some information that I wanted to pass on to you.  Banks are carrying about a 36 month inventory of properties in foreclosure, meaning if they did not file another Notice of Default, we still have 3 years of inventory to burn through.  The banks will not over saturate the market with foreclosed homes, when they sell a foreclosure, they take a foreclosure.  The banks have a common formula; 1 foreclosure for every six jobs that are lost.  The banks are VERY concerned about a third wave of foreclosures due to the Adjustable Rate Mortgages due to readjust.  The banks are concerned that even with lenders trying to mitigate the ARMS, home owners will use this as a reason to walk away.

What does all of this mean?

If you are a seller or are considering selling, things are not going to change anytime soon.  You will be competing with REO’s, take advantage of that by offering what they don’t have. Be a turnkey home, with a competitive price.

If you are a buyer, it is a good time to buy, IF, you find the right house that fits your needs and you plan to live in the home for at five to six years.  Buyers need to make smart moves when it comes to location, floorplans, etc.