Orange County

[NAR_SHILL]

Beverly Hills defaults and foreclosures booming

Oh I'm sure many will claim "it's different in _______________ (various high end neighborhoods/beach cities in south OC)"...

Here are some choice excerpts:

Some 180 houses in Beverly Hills, the storied Los Angeles enclave rich with Hollywood stars and music moguls, have been foreclosed on by lenders, scheduled for auction, or served with a default notice, the highest level since the 2008 financial crash, according to a Reuters analysis of figures compiled by RealtyTrac, which tracks foreclosures nationwide.

But the dynamics of the residential real estate collapse are very different in elite neighborhoods such as this. The majority of delinquent homeowners here owe more than $1 million. Many are walking away not because they can't pay, but because they judge it would be foolish to keep doing so.

Bremner said she helped a client buy a Beverly Hills mansion last year that the prior owner had bought for over $4 million. He decided to stop paying his $3 million mortgage - even though he could easily afford it - when the value of the property had dropped to $2.5 million.

"They were able to comfortably cover the loan," Bremner said. "They were just no longer willing to see the value of the property drop."

A huge "shadow inventory" is building of elite homes that are in default but have not been put on the market. Of the 180 distressed properties in Beverly Hills, only 12 are up for sale.

DEFAULTS ON "JUMBO' LOANS SOARING

Across the United States, the largest increase in foreclosures and delinquencies, compared with 2008 levels, is with "jumbo" mortgages - loans too large to be insured by Fannie Mae and Freddie Mac, the government controlled mortgage finance providers. Foreclosures on jumbo loans are up 579 percent since 2008, greater than any other form of loan, according to a report last month by Lender Processing Services, Inc

[Goran_K]

NAR_SHILL! Where have you been?

[NAR_SHILL]

Hey Goran!  Sorry, been crazy busy the last few months.  I actually bought a property a few months ago, 40% off peak value if not more.  But this party isn't over by a long shot.  No doubt the big banks will continue to keep these high end properties off the market/in shadow inventory limbo, trickling them out slowly in the continued game of extend and pretend.  But these property values have been slashed over the past 5-6 years regardless, and won't be rocketing up any time soon.

[Goran_K]

I know how you feel. I'm about to close on a short sale myself, also about 45% off peak value. I think prices will fall a bit more, but I don't see anymore 50% crashes unless Orange County becomes Somalia.  

Where did you end up buying if you don't mind me asking? 

[Polar]

@NAR SHILL,

The silence of real estate sales people on this is deafening. The looming and most threatening part of shadow inventory is about to crater all the federal government/state gimmicks and machinations of the past 4yrs. When employed, upper middle class people see they are left behind w/o government aid, are underwater or break even, see there is minimal appreciation down the road and are in their late 40s to 60s they too will stop paying and demand a better deal. Can the banks sustain this redux? Can the government? Can the tax payer? Can the RE market?

I feel we are at a more precarious point now than in the past 4yrs. Hope I am wrong but been mostly right the last 4-5yrs.

[NAR_SHILL]

"Where did you end up buying if you don't mind me asking?"

In the Beverly Grove/Miracle Mile/Museum Square area of L.A., between Hancock Park/Windsor Square and Beverly Hills.

[BobPhillips-RE]

"Hope I am wrong but been mostly right the last 4-5yrs."

Kindly show us the links to the litany of your sage predictions, Oh Guru.

[BobPhillips-RE]

"The looming and most threatening part of shadow inventory is about to crater all the federal government/state gimmicks and machinations of the past 4yrs"

Where IS that mysterious "shadow inventory"?  Probably swept away by the Tsunami of foreclosures doom & gloom bloggers have been predicting for - how long?  FOUR YEARS NOW?

[Goran_K]

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NAR_SHILL wrote:

"Where did you end up buying if you don't mind me asking?"

In the Beverly Grove/Miracle Mile/Museum Square area of L.A., between Hancock Park/Windsor Square and Beverly Hills.

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Nice. I hope you're enjoying it.

[BobPhillips-RE]

"Some 180 houses in Beverly Hills, the storied Los Angeles enclave rich with Hollywood stars and music moguls, have been foreclosed on by lenders, scheduled for auction, or served with a default notice, the highest level since the 2008 financial crash."

Just out of curiosity, how many houses ARE there, in Beverly Hills?  I'll bet that 180 is a pretty minuscule percentage of the total.

Just more doom & gloom BS hyperbole, methinks.