REGIONAL SPOTLIGHT—According to the Central Coast Regional Multiple Listing Service, distressed properties make up only 6 percent of the available listings on the market in San Luis Obispo today. The California Association of REALTORS®’ Distressed Home Sales Statistics confirm a recent decline in the total amount of all reported sales of distressed property statewide. There was an increase in January to 50.1% from December’s 47 percent but it’s an overall decrease from January 2011 when the total share of distressed property sold in California was 53.5 percent.
According to Dawna Davies, owner and broker of a local real estate company, investors and homebuyers have continued to buy up the available inventory of distressed properties. The distressed property market however, does have limitations. While there is an opportunity for investors and potential buyers to get a discount on a distressed property, there is also a lot of competition among buyers.
“At the moment distressed properties, also known as short sales, foreclosures, bank-owned property, and notice-of-default-filed property make up only 14 percent of the inventory of available properties in the county. In San Luis Obispo, at this time, that number is closer to 6 percent. If buyers limit themselves to distressed properties only, they will have very little inventory to choose from,” says Davies, GRI certified real estate broker.
In January the sales of distressed properties in San Luis Obispo County totaled 36.7 percent, down considerably from February 2011 when the total was at a year high of 52.7 percent. Since February 2011 the amount of distressed properties sold has been declining. This means that the amount of available distressed property types, foreclosed property or short sale property, is becoming more limited.
The distressed property market is competitive and excludes property with equity that may also be a good deal and is typically easier to finance with conventional lenders. Equity sales are conventional transactions where the home is worth more than the amount of the total loans, or may have no loans. Property with equity, according to Davies, is generally better cared for and has less corrective work to be done.
“If an investor does not have enough cash to purchase without financing, they should not focus on only distressed properties. They can still take advantage of the lower interest rates, motivated sellers, and get in the market while it is setting record highs for affordability through a conventional equity sale. Recently, I am seeing many competing offers on properties, including all-cash offers and some properties going for more than asking price, ” says Davies.
