Foreclosures Not Too Healthy

Our beloved zip code is showing a sign of real estate stress.  According to recent RealtyTrac data, there were 31 foreclosures which represented one foreclosure for every 595 homes.  At the same time last year, we recorded one foreclosure filing for every 1,216 units in Montclair and Piedmont.

Last year, our foreclosure rate was a third of the national average and now we’re starting to catch up with the rest of the country.  In November 2009, our 94611 zip code recorded only 0.08% compared to 0.24% nationally.  This past month, we doubled to 0.17% while the USA decreased to 0.20% overall.

The somewhat good news?  Current 94611 foreclosures fell well below numbers notched by Oakland and nearby neighbors.  In November 2010, our 0.17% rate compared favorably to 0.47% for Oakland, 42% for Alameda County and 0.43% for the State of California.

Statistics here aren’t damned lies, and the percentages and numbers are still very small.  For those 31 former owners of Montclair and Piedmont properties, however, this past year must have been rough going.

Our 94611 Foreclosures Not That Bad

Every so often, we have looked at real estate prices and foreclosures to see when the tide would turn. The foreclosures are not that bad lately, based on recent 94611 zip code filings that have slowed down.

Let’s start by comparing our foreclosures to virtually anywhere else.  We’re running about 25% of Oakland’s rate overall, some 0.08% vs. 0.32% during November.  For Montclair and Piedmont, our rate translates to around one foreclosure filing for every 1,216 units.

In the past few months, you can see that 94611 foreclosure filings have also dropped.  They ran over 40/month during the third quarter, and dropped to 20/month and below more recently.  Also notice that foreclosure sales prices are holding steady these days – so the tide seems to be turning.

We also took a look at the mix of distressed properties for sale.  While all area properties sold for under $700k last November (, the prices for foreclosures are lower and now average $523k (  What’s evident is a well-distributed mix among lower and higher-priced units.

In a nutshell, the 94611 foreclosure situation seems to be under control.  The volume of foreclosures, the prices and trends are all moving in the right direction.  It’s true that foreclosures are an epidemic in California and Northern California – but not right here.

Hiding In 94611 Real Estate Forest

How is the real estate market in our beloved 94611 zip code?  If you look at median prices and foreclosures, then the market appears to be leveling out.  When you look at sales volumes, that’s where the trouble spot seems to emerge.  Let’s go visit the forest and trees.

Median Sale Prices Moderated

Cyberhomes most recently reported $709,980 median price (from August) versus $718,918 six months ago, only a 1.2 percent seasonal drop.  These medians each reflect 14-15 percent declines since last year, so they have steadied now.

Another source, City Data, shows quarterly price trends since 2004.  When you check the fat red line below, it’s obvious the 94611 zip prices crashed back in 2007 and declined further last year.  But things are relatively flat these days.

City Data, 94611 - Q2, 2009

Far Fewer Homes Sold

Now there’s a real story behind the precipitous drop in sales transactions, which began in earnest this year.  Take a look at City Data’s blue-colored bars, in the chart above, and you see the plummet during the first half of 2009.

Over 50 homes sold in the first quarter, or about a one-third drop from the same quarter 2008.  Things seemed to get even worse second quarter, with fewer than 50 homes sold – a two-thirds drop since last year.  Yup, potential sellers aren’t selling.

Foreclosures, 94611 - 2008-2009

Foreclosure Levels Declined

RealtyTrac reports the grimmer foreclosure facts related to defaults, trustee sales and bank-owned properties.  Over the past six months, overall 94611 foreclosures have gone down – and this contrasts with overall Oakland and Alameda County trends.

We wonder if there’s a flash point for homeowners, though.  Many people have been been hit hard by this recession, though it’s impossible to say whether that translates into a trickle or stream of “must sell” homes ahead.

So there is a real estate forest, and it’s easy to hide there! You can walk by and conclude that market is settled, but a little quiet and tamped down.  When you stop and really stare at the trees and wildlife, you see plenty of dynamic influences too.  We’ll have to wait patiently and watch the post-recession changes and equilibrium in there.

Canaries Flying Around Our Home Values

In the 94611 zip code, the real estate market is still alive – but there might be both healthy and sickly canaries flying around this coal mine.

Home prices have begun decreasing again, through mid-February. The 94611 median values were $718,918, reflecting a 15 percent decline over last year.  By contrast, Oakland’s values were $332,688 and dropped 34 percent.  While the hills performed better, that’s nothing worth gloating about!

City Data - 946111

Here’s what a bubble and post-bubble look like, in these 2003- 2008 trends. Clearly the prices dropped at a faster pace than inventory in our zip.  Prices hit rock bottom by the fourth quarter of 2007, and increased $100k by 2008 year-end.  Inventory started to disappear as a lagging indicator, with 50 percent fewer homes sold in the same time period.  Yes, we’re still in transition now.

RealtyTrac - 946111

Foreclosures are everywhere. To make this feel quite real, look at the map depicting pre-foreclosure, bank-owned, resale and auction properties reported by the bad-news bears, RealtyTrac.  We’re seeing a visual story of single homes scattered equally across the hills, in all prices ranges.

Foreclosures - 94611

Foreclosures are trending higher, and much higher than Oakland and Alameda County rates.  This is a surprise, since we were sitting pretty between December and October.  When you examine the foreclosure rates reported today versus December, however, we’re still swinging upwards.  Maybe it took longer for available rainy-day funds to dry up?

We’ll continue to watch the local economic levers, like you.  We’re pretty sure the 94611 market will stay tamped down and there won’t be any flood of homes for sale.  But there were two ailing canaries recently:  slightly lower home prices and higher foreclosures.  Maybe these birds will continue to live, after all.