San Diego foreclosures are a lot cheaper!
In San Diego County, California, “Single-family houses in foreclosure sold for a median price of $365,000, compared with a median of $500,000 for nonforeclosures. The 2005 peak in that category was $565,000.”
Throw in a study from a university professor.
In areas with no foreclosure sales, the median house price dropped 5.3 percent on average in the past year, as measured by price per square foot, Gin said. But for every 10 percent increase in the percentage of transactions that were foreclosures, the median price per square foot dropped an additional 3.6 percent.
For example, in La Jolla, which had no foreclosure sales in the first quarter, the median price per square foot on 42 sales was $698, a figure 5.7 percent lower than a year ago. In National City, where nearly half of the 30 houses sold in the first three months of 2008 were foreclosures, the $268-per-square-foot price was down 32.7 percent over the past year.
Emphasis mine.
3 responses so far ↓
1 Brian McMorris // Apr 30, 2008 at 7:40 pm
For all you doubters regarding the possibility of a 30% decline in home prices, equaling the Great Depression, the Case-Shiller numbers are in for February. They show Phoenix down 20.8% YOY through February. Considering the peak was in August 2006 and prices probably continued to decline through April, it may be approaching 30% right now, on average.
My own calculation on the Case-Shiller Aggregate data from August 2006 show a -23.7% decline thru February.
Here is a story from San Diego that confirms the price declines for that market:
http://www.signonsandiego.com/news/business/20080430-9999-1b30housing.html
2 packerbacker // May 1, 2008 at 5:10 am
At the height of the Great Depression in 1932-1933, roughly 10 percent of all mortgages entered the foreclosure process—at the end of 1932, the single worst year for mortgages about 2.4 million mortgages were at some stage in the foreclosure process. Today, the foreclosure rate stands at between 1.4 and 1.5 percent (about 1.5 and 1.6 million mortgages in forclosure); even the most pessimistic estimates do not show it rising about 2 percent. Even if the total number of mortgage foreclosures does exceed 1932’s apparent record of 2.4 million—and we could not find an estimate saying that it would—one should look at the number in the context of the overall economy and, relative to the overall economy, 2.4 million foreclosures would not be a major calamity
By Eli Lehrer and Matthew Glans
3 Brian McMorris // May 1, 2008 at 8:59 pm
I would guess that most people aren’t as concerned about the rate of foreclosure as they are the decline in average house price.
In the 30s, there were no short sales and banks had fewer options to work out bad mortgages. The local thrifts of the day had only the reserves in the vault. And when people wanted their deposits back, they had to pay out of the vault till it was empty, a classic “run on the bank”.
Banks are much larger today with more options, including most significantly, a Fed that will backstop the bank with lending at the discount window. The mortgage / banking system really cannot be compared. But the average price decline percent can be.
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