Orange County Housing Report

A WAVE OF FORECLOSURES?

Parents worry about their kids all the time. Often, their minds jump to the worst-case scenario.  As their newly licensed teenager drives down the street solo for the first time, mom and dad are concerned that their inexperience could result in a devastating accident.  Hiking as a family on on one of Southern California’s many hilly trails often leads to unexpected sheer cliffs just feet away.  Many parents visualize the potential for one of their children to lose their footing and slip to their peril.  Parenting is full of anguish.  To keep their kids safe, they, unfortunately, must consider the most severe outcome that can reasonably be expected to occur in every situation.  Similarly, due to the recession, everybody is jumping to the worst-case scenario for housing, the inevitable wave of of foreclosures to come.

It is crucial to immediately point out the simple fact that just because the economy is in the middle of a recession does not mean that the housing market will tank, values must go down, and many homeowners will lose their homes due to foreclosures or short sales.  In fact, in the past five recessions, only two have led to declines in real estate values, the recession that began in 1991, and the Great Recession that started in 2008.  Both were fueled by asset bubbles in housing that eventually popped.  The recession in 1991 was powered by the savings and loan crisis.  The Great Recession was driven by subprime lending and risky investments in mortgage securities.  Thus, a wave of foreclosures ensued.

Today, there are only 11 foreclosures and 7 short sales to purchase in all of Orange County, that is 18 total distressed listings, the lowest level since initially tracking distressed listings began back in 2007.  It represents only 0.4% of the active listing inventory and 0.4% of demand.  Compare that to January 2009 when there were 5,104 distressed listings, 44% of the active listing inventory, and demand (the last 30-days of pending sales) was at 1,428 pendings, 67% of total demand.

The bottom line: do not count on a wave of foreclosures or short sales due to the economic fallout of the COVID-19 recession.  While there may be a bit more distressed in 2021, a slight rise, it will pale in comparison to the great recession.

Excerpt taken from a report by Steven Thomas

Quantitative Economics and Decision Sciences, B.A.

 

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 43 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 23 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.