So What's Going On with Foreclosures?

There has been much written and discussed in the media about the current real estate market and the impact that the growing number of foreclosures are having on real estate prices. Is the media being "fair and accurate" in its depiction of the “foreclosure crisis” with regards to our local real estate market? Well, yes and no.

Her is a breakdown of foreclosure activity for Westwood and several other Westside locations.

As you can see by viewing this data, the number of homes that actually go into foreclosure on the Westside is still insignificant. Notice however that there has been a 100% increase in Westwood/ WLA 90025 from 2006 to 2007 and a 500% increase in Brentwood 90049! And so the media reports these sorts of statistics out of context and understandably you, the public out there think that the real estate market is crashing and burning. In fact this is what Jamie and I hear whenever we meet with homeowners concerned about the real estate market.

By contrast, take a look at these stats for some other neighborhoods:

What becomes clear from this data is that the market in these areas is being significantly impacted by foreclosures, but when the media reports this information and implies that this is a city-wide phenomena, that is inaccurate and irresponsible. And to this point, although the number of transactions on the Westwide is down from previous years the values are holding. Don't be fooled by active listings that have had their prices reduced. Those are likely the result of homes that were not priced correctly when they initially came on the market. Jamie and I just sold 1946 Midvale Ave. for $1,880,000. This exact home was purchased by the sellers as new construction in 2006 for $1,900,000. A drop of about 2%.

Nationally there huge numbers of bank foreclosures in many parts of the country that are coming back on the market as REO properties and drastically increasing the inventory of homes on the market. As supply grows it creates a downward pressure on prices. In addition, the overall economy in many parts of the country are feeling the effects of a recession and home-buyers are reading articles every day about the collapsing real estate market (sound familiar). These factors are in turn are leading to a decrease in demand for homes to purchase. The net result of a swelling supply and a diminishing demand has put significant downward pressure on home values and not surprisingly, home prices are dropping.

The reality is that real estate markets at this time are localized and need to be evaluated as such. We welcome your comments, please post.