Orange County, Newport Beach and Costa Mesa Buyers Take note – The days of a foreclosed home being sold for 20 percent or more under market value are all but gone in the Southern California and Orange County marketplaces, especially in ideal locations such as Newport Beach and Costa Mesa. And with good reason. Well-priced homes (even those needing work, but priced accordingly) in desirable areas are selling fast, often with multiple offers at or above list price.
Zillow.com’s most recent analysis took a new mathematical approach to this issue – finding a mere 4.2 percent “discount” for foreclosed properties in the Los Angeles area. Zillow does not assess Orange County within a separate category.
That “discount” has fallen dramatically from a high of 24.8 percent in August 2009, to 9.7 percent in September of 2011, to the current 4.2 percent. Nationwide, the “discount” is estimated at 7.7 percent. Many areas – such as San Diego, Sacramento, Las Vegas and Riverside – have little to no “discount” at all.
Of course, these numbers are difficult to quantify as Zillow’s new approach compares the sales price of foreclosed properties to an estimate of what the property would have sold for under normal conditions. A process ripe with estimation. Prior estimates simply matched foreclosure sales vs. non-foreclosure sales; an unfair comparison given foreclosures tend to be less updated, less maintained and often in less desirable locations.
Supply-and-demand along with historically low interest rates are the primary basis for the declining “discount.” Desirable areas have extraordinarily low inventory right now; hence people are willing to pay the same for a foreclosed property as a non-foreclosed property in the same condition.
Prospective buyers seeking pleasant homes in desirable locations (such as Costa Mesa, Newport Beach and Huntington Beach) should understand this new competitive marketplace in their searches and no longer anticipate any significant “discount” when viewing or bidding on foreclosed properties.
Author Devin R. Lucas is a Real Estate Attorney, Broker and REALTOR®, specializing in Newport Beach, Costa Mesa and Orange County, serving individual, investor and small business interests in real estate. Active with the Newport Beach Association of REALTORS® and Costa Mesa Chamber of Commerce, Devin R. Lucas Real Estate is an independent real estate brokerage and law practice located in Newport Beach, California.
Devin R. Lucas Real Estate
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