Buyers are looking for the Foreclosure. They have heard that the foreclosure is the real deal. Last year banks, in the Corona/Riverside area, dumped some badly damaged properties onto the market. They were accepting anything just to clear out their bad inventory. you could easily pick up a place and get some sweat equity. Today you need to think of those as "The good old days!" That was then this is now.
Today many banks are managing the rehabilitation of their vandalized properties. They paint and repair the home to make it a turnkey property. They are slowly releasing inventory of vacant properties onto the market. The banks new policy is to minimize the losses that they once realized because of their panic selling. Their new policy seems to be to release the vacant properties in determined and systemmatic manner. Their new policy is creating a consumer confidence in the market.
The banking industry has had major procedural changes since 2008. The government involvement has moved them from a rapid foreclosure procedure to a new process of placing emphasis on Loan Modification and Short Sale. Today banks use foreclosure as a last and least desirable solution.
Look at the numbers. In Corona - Eastvale there were 70 homes sold in January. Today there are nine Bank Owned properties listed. There are 79 Short Sale listings. The banks are not yet up to speed in handling short sales. They are under pressure to do loan modifications whenever possible. The sooner they take the hit on a short sale the sooner it is off their books. Most banks are gearing up to streamline the short sale process. The business as usual model for the next two to three years will be short sale. The result of this procedural shift is that it will smooth out the next spike anticipated by the loans that are pending a reset.
The market must anticapate not only the impact of the reseting loans but also the growing anger over upside down loans that are presently being paid monthly by responsible owners. Owners who are seriously considering a Strategic Default. Thus far the banks have succeeded in stabilizing the market locally. Prices are slowly climbing. Each month that passes with increased values creates a softens the impending blow of a wholesale Strategic Default spike.
Bad loans being considered, house values of today seem to be unrealistically low. Why? In today's dollars, a preponderance of the homes selling are selling at a price that is below their replacement cost. From an investment standpoint, many homes can be purchased and rented out for a gross return around 8% or more. Throw the inflation factor on top of that return and you may understand why so many homes only stay on the market for a few weeks.
As a Realtor in the Eastvale area I regularly have people tell me they do not want to get involved with a Short Sale transaction. Buyers know the facts. They have heard of the many short sale cases that drag on for months and just as they are ready to close the whole deal finally explodes! Believe it or not, the banks are moving to change that situation. It is taking time for them to retool for the new model.