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Monday, June 02, 2008

Price Distribution of Distressed Homes

by Calculated Risk on 6/02/2008 11:18:00 AM

Update: for Minneapolis, see Minneapolis: Price Distribution of Distressed Homes

Jon Lansner at the O.C. Register writes: Distressed homes 63% of O.C.’s cheaper supply

As a percent of all listed homes for sale, distressed properties were 38.7% of the market last week vs. 36.7% two weeks earlier ...
It appears distressed inventory is continuing to increase in Orange County similar to the national trend (see the WSJ: Number of Foreclosed Homes Keeps Rising). Note: distressed sales include short sales and REOs.

What is interesting is the numbers are broken down by price range. Here is a graph showing the numbers from Lansner:

Orange County Distressed Homes Click on graph for larger image in new window.

Not surprisingly, there are many more distressed homes for sale at the low end; over 70% of inventory is distressed in some of the poorer areas of Orange County (like Santa Ana). Although the lowest category for the graph is less than $500K, many of these distressed homes are probably significantly below the previous conforming limit and were probably purchased with subprime loans.

Naturally the areas with a higher percentage of distressed properties have seen faster price declines. Of course those areas also saw the most appreciation because of loose underwriting for subprime lending. Here is a graph (from a post on Saturday) showing the real Case-Shiller prices in Los Angeles for three price ranges.

Los Angeles Real Prices This graph show the real Case-Shiller prices for homes in Los Angeles by price range.

The low price range is less than $417,721 (current dollars). Prices in this range have fallen 34.9% from the peak in real terms.

The mid-range is $417,721 to $627,381. Prices have fallen 30.7% in real terms.

The high price range is above $627,381. Prices have fallen 22.8% in real terms.