You search homes on an MLS based website looking at listing after listing. Some have pictures, some don’t. You check out the new neighborhood websites and find details about schools and amenities. You fly around the neighborhood looking at values in Zillow or Cyberhomes. Yet with all the data available you are only part way to the truth about the neighborhood, the home and the overall value of your prospective purchase.
Here is what I mean.
The image above is of a neighborhood in Stockton called Morada. Though sliced in half by Highway 99, everyone shops at the same grocery store, and their children go to the same middle and high schools. Reviewing neighborhood and property characteristics on services like Zillow for instance, you might determine that the right side of Morada, made of largely older and smaller homes is less desireable. Aerial photos further support that impression through funky streets, no sidewalks, and reasonably dense housing. From this you may conclude the right side is not the place to be.
So you would think.
Enter the foreclosure story. On the left side of Morada is an overdeveloped disaster marked by many foreclosed homes. On the right side, long favored by locals, you have almost no foreclosures due to long term ownership and considerable equity. With this one picture the simple truth of desirability becomes clear.
33% of sales in CA are now REO (bank owned) resales. Many more are short sales, and almost as many foreclosure auction sales exist as all other sales combined. Without access to foreclosure data it is arguably impossible to “know a market”, set sales prices, make purchase offers or advise clients properly.
Here is one neighborhood, divided by a highway, yet worlds apart when it comes to the truth about it’s value, it’s opportunity and it’s story. There are thousands more just like it.
Sean
Sean — Terrific post, makes a good point and reminds us why local knowledg, as they say in golf, is necessary to evaluate real estate markets. Welcome to the blogosphere. I’ve enjoyed your reports and analysis and look forward to reading and linking to your blog.
Pete Viles
LA Land blogger, LATimes.com
Thanks Pete! Folks, be sure to check out Pete’s L.A. Land Blog here, or in our blogroll on the right. Definitely an interesting and trusted source on the foreclosure crisis.
Sean
The satellite imagery at maps.google.com shows newly-graded, empty lots in the Morada area west of 99.
Man — the whole neighborhood went into foreclosure before google even had a chance to update its satellite data.
Yes, foreclosures have been highly concentrated in new developments that were primarily sold 2005 to 2007. For the simple reason that simply everyone is upside down. While not the cause, there is no doubt in my mind that builder discounting got the wave of foreclosures rolling here. Many folks that had just bought soon after saw the same house for $50-100k less, and often with a free pool or other giveaways. If they used 100% financing and already had poor credit (subprim), there was little reason not to walk away.
The spatial division of cities into districts or neighbourhoods is one
of the few universals of urban life from the earliest cities to the
present.
If the county can stabilize certain blocks in troubled neighborhoods,
it could be a first step toward enticing middle-class homebuyers to
consider those communities.