Sonoma REO Sales and Inventory
2011 has started out to be a hot sales year for REO properties. The chart (click on it for a bigger version) shows strong sales and a modest inventory in the first two months of this year. The famed shadow inventory is undoubtedly real, but the banks have collectively controlled the release of new REO properties to maintain a small inventory and high demand.
What jumps out as a key number from the chart is that the light blue “sold” column is bigger than the active column in the darker blue. If you add the contingent and pending columns to the sold column you can get a better sense for just how slim the inventory of REO single family homes in Sonoma County is. There are 493 homes represented in this chart, but of that number, only 170 are available to purchase. On the flip side, that means 323 homes are either sold or are in escrow. Using a common real estate measure of market strength, the market absorption rate in Sonoma County for bank owned homes appears to be approximately 160 homes per month. 170 active listings is barely a one month supply. Even leaving out all the contingent and pending properties, over 187 Sonoma County foreclosures have sold since January 1. Our current inventory doesn’t even cover two months’ supply at that rate.
However you want to play with the numbers, if you want to be an active participant in the Sonoma County REO market, you have to be prepared to act quickly when the property you want comes on the market.
1. Make sure your pre-qualification process is completed and your mortgage lender is ready to work with you when you submit an offer. Get all your income and expense paperwork gathered together to make the loan process more organized.
2. Make sure you are receiving daily updates about new REO properties in the cities and price ranges you are interested in. (email me with your city and price range and I’ll be happy to set up an automated search)
3. Don’t ignore news reports about the housing situation, but keep in mind that local conditions often trump national trends. Sonoma County is not the same as Stockton or Las Vegas.