Today’s Talking Point 11/10/09
High End Foreclosures Starting to Mount
From an article on SF GATE:
In upscale communities such as Los Altos, Greenbrae and Alamo, where median prices top $1 million, about twice as many households received default notices from January to September as in the same period in 2008, according to recorders’ office data compiled by MDA DataQuick, a San Diego real estate research firm.
We have talked about the foreclosure situation hitting the upper-end inventory. This has begun. We must set the prices of mid-tier and upper-tier homes or foreclosures will. Once it starts, it gains momentum rapidly. As the article says:
For instance, in Saratoga, lenders repossessed 16 homes from January through September this year, up from six in the same period last year. But if half the 101 default notices in that town result in foreclosures, that would mean 50 more homes on the market in coming months. Homes there now sell at a rate of about 20 a month, and there are already 134 listings. A deluge of supply, coupled with the lower prices of foreclosures, would have an undermining effect. “Foreclosures have a snowballing effect,” Hanson said. “They establish terrible sales prices and then everyone’s value comes down, and then you have thousands more people in a deeper negative equity position, which increases their likelihood of default and foreclosure.”
Let’s get prices where they should be before this gets worse.