Orange County: foreclosures 45% of inventory

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Foreclosed properties and ‘short sales’ --homes for sale at less than the outstanding mortgage amount-- now comprise 45% of listings in Orange County, according to an analysis of listing data by Aliso Viejo broker Steven Thomas.

Santa Ana remains the foreclosure capital of the county, with foreclosures and short sales now making up a bit more than 80% of listings there. We recently wrote about foreclosures prompting sales in that city, a trend that appears to be building steam.

Just behind Santa Ana with the highest percentages of foreclosures and short sales among listings are Anaheim (78%), Garden Grove (74%), Rancho Santa Margarita (70%) and Lake Forest (70%).

Seal Beach, Corona Del Mar and Laguna Woods have the lowest percentage he county of foreclosures and short sales among listed properties -- about 3% in each of those areas...

Not surprisingly, distressed properties are mainly at the mid-to-low end of the market.

Among single family properties listed at or below $500,000, 78% are foreclosures or short sales. But even in the pricier $750,000 to $1million listing range, 22% of single family homes are foreclosures or short sales.

Foreclosures are clearly the driver of sales activity in the county, Thomas’ data shows. The time-on-market for foreclosures is about six weeks, compared to five months for all Orange County homes listed.

Thomas is calling a market bottom for Orange County in June, 2009. Affordability is being helped by the foreclosure inventory as well as lower interest rates, he contends. Thomas said he expects ‘the doomsayers, a.k.a bloggers, will eat me alive’ for his bottom-calling.

Perhaps, but his prediction of a June bottom is actually close to those of forecasters like economist Christopher Thornberg, who has said late 2009 will likely be when prices find their floor. Thornberg and others, however, cautioned that a bottom is not a rebound (I think Thomas would agree). Prices may stop falling dramatically, but they won’t be rising significantly for quite some time after hitting the initial bottom.

--Peter Y. Hong