I am not an expert in real estate investing. So I pay attention to those who are when making my investment decisions. The best expert I know on California real estate is The Norris Group, a Riverside-based real estate training, consulting and publishing firm (http://www.thenorrisgroup.com/). Their predictions of real estate trends and expectations have generally been very accurate from what I have read, and they base much of their thinking these days on statistical relationships between things like personal income, house prices, foreclosure and default rates, and the like. Here is an alarming quote from their latest quarterly newsletter:
“According to some, the worst is almost over, and the (real estate) market is beginning to stabilize. That conclusion defies logic. The exact opposite is about to occur.
DataQuick (a real estate data provider) just came out with their foreclosure numbers for the first quarter of 2008. For California, it reported 47,171 trustee sales in the first quarter, an all-time record. The conversion percentage of the Notices of Default going to trustee sale is now 68%, also an all-time record. Therefore, according to Data Quick, there must have been 69,369 NODs that converted 68% of the time to 47,171 trustee sales. The number
of Notices of Default for the first quarter 2008 was 110,000! If the conversion ratio stays the same, 75,480 trustee sales should record in the third quarter 2008. That represents a 60% increase from an already record number of trustee sales.
Furthermore, DataQuick reports that 38% of all resales in California were lender-owned properties in March, 2008. By the third quarter, the percentage for the entire state will fly by 50% lender sales.”
So if you’re interested in California real estate investing today, get friendly with your local banker. They’re going to be holding some mighty big sales in the months to come.