The current real estate correction that is hitting south Orange County (and elsewhere in SoCal) is hitting the entry level marketplace the hardest.  This is primarily due to the recent collapse of creative financing loans and sub-prime lenders. 10 Years ago many of these types of loans did not exist, but an explosion in creative financing occurred about 6 years… From Zero Down conventional loans, loans for buyers with marginal credit ratings (ie: low FICO scores), and even loans that allowed borrowers to essential make up a figure as to how much they made per year ( ie: Stated Income loans).  Today, most of these types of loans have been terminated and many sub-prime lenders are out of business, and this has taken a toll on the entry level real estate marketplace, combined with the ebb and flow of regional price corrections.

To illustrate this fact, we conducted an analysis similar to last weeks analysis of distressed properties per south OC city.  Today’s’ price analysis looks at the number of distressed properties listed for sale in five (5) different price ranges throughout south Orange County.  A distressed property in this case means a home listed for sale that is Bank Owned (REO), in Foreclosure or is a Short Sale.  Below is a tabulation of the results.    The first column is the price range analyzed, the second column is the total number of distressed properties listed for sale, the third column is the grand total of all homes listed for sale in the price range, and the last column is the ratio of columns 2 and 3 per 1,000.  (The cities included in this analysis are:  Aliso Viejo, Dana Point, Coto De Casa, Corona Del Mar, Irvine, Laguna Beach, Laguna Hills, Laguna Niguel, Lake forest, Mission Viejo,  Rancho Santa Marg, San Clemente, San Juan Capistrano, and Tustin.)

In the Less Then $450K price range, nearly 1 out of 5 homes listed for sale in south Orange County is a distressed property (Bank Owned, foreclosure or short sale).  On the other end of the spectrum only about 1 in 100 homes listed for sale in the Greater Then $1.1 Million price range are distressed.   The good news is that if you are now a buyer looking for a home in the price range of $500K or less, there are a lot of good opportunities out there.

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