Simple answer. Everywhere. In San Jose, according to Foreclosure Radar, there are 600 foreclosed single family homes, condominiums, and town homes in the San Jose area. See the map below for the general distribution (partial display as there were too many to place on one map). Certainly there are pockets of hard hit areas, Alum Rock near Central Expressway and HWY 680 and the Mc Laughlin corridor. Other areas are slightly spared from large percentages of REOs and these include Willow Glen and Cambrian Park. Willow Glen has about 5% of active homes for sale listed as bank owned, Cambrian Park 9%, and Alum Rock 13%.
Interesting to note that of the 600 reported bank owned homes in San Jose, only 200 homes, 1/3, are listed for sale on the MLS (Mulitple Listing Service). Obviously, there can be some time between repossession by the bank and introduction to market but it would certainly be nice to have 400 more homes for my buying clients to choose from in the market place.
Reality prevails and we know that not all 400 will come to the public market. Some are being sold wholesale in bundles for 20 cents on the dollar. Others are purchased on the court house steps by “flippers” and re-sold as a private sale. These flippers are making money. The consumers paying for it are the clients who want “new” in a valley full of 1960 homes. They kindly pay the flipper for installing granite, new tile, and laminate flooring. In some ways, flippers are doing better now in this economy because there are more contractors hungry for work.
But I am ahead of myself, because we haven’t counted the pending sales. There are actually 250 pending sales indicated as bank owned on the MLS. So now we are down to about 150 bank owned homes unaccounted for in the market. But wait, there’s more. In April, to date, 163 homes have been sold that were indicated as REO. Hmm…now there’s an issue. I am going to chalk that number up to the fact we don’t know exactly how Foreclosure Radar counts bank owned and how far this particular map goes back. It could simply be an update issue.
But the reason of this post is to say, there are bank owned homes available for sale in San Jose. There are 200 homes that need to be absorbed. Absorbed before the 446 short sales become REOs. There are almost as man short sales in contract, waiting for the lender’s response as there are active homes for sale. Yes, there are 1,992 homes for sale in San Jose, and 1,726 pending short sales. Considering the statistics that only 3 out of 10 short sales make it to close of escrow, that would leave about 500 homes that will be back on the market due to TFT (Transaction Fell Through).
Where are the deals? The deals are in low demand areas. Homes that sit in the flight pattern of San Jose International Airport, homes on busy streets or next to highways, and low performing school districts. What a deal. But rentals are needed and investors with all cash are buying up homes at an alarming rate. Most of the uptick (nearly 30%) in March for home sales can be credited to all cash buyers. Now they will be landlords to displaced home owners around the city. Let’s hope they are kind and provide fair market rents.
The foreclosures and short sales provide opportunities for patient, confident home buyers. Confidence is one of those things sorely lacking in this current housing market by the average home buyer. Interesting to note that investors, who have no emotional connection to the purchase, see it as a time to buy. Willing to place hard cold cash on the bet of future return. I would encourage new home buyers to attend local real estate investment group meetings. They may find confidence in listening to investors who are buying up distressed homes everyday without hesitation. Speculation or savvy thinkers? Only time will tell. I am grateful they continue to absorb REOs and help to provide stabilization to the housing market in San Jose. Buy on!
Disclaimer: Statistics and information is deemed reliable but not guaranteed. Data is based on information from Foreclosure Radar and the local Multiple Listing Service on April 28th, 2011. Any use or duplication of this blog material requires permission from the author: CJ Brasiel Certified Distressed Property Expert and Short Sale Negotiator.