There's a lot of chatter on real estate blogs about the steep increase in foreclosures and short sales in Palo Alto. Unfortunately many sites post stats from a company called Realty Trac which tracts everything from a Notice of Default through a listed bank owned property. Many things can happen before a home with a Notice of Default actually gets to be sold by the bank, but unless you read the fine print carefully it is easy to confuse a house that is behind a few months in payments with an actual bank owned property on the market for sale.
Most bank owned homes as well as short sales (where the seller owes more than the home is worth and the lender/lenders have agreed to accept less than the amount of the mortgage to release the debt) are sold through the MLS. So to see how many of these distressed sales have hit the market in the last year I went to the MLS and looked.
Here is what I found for single family homes:
Bank owned properties sold in last year: 4
Current Pending sales of Bank owned: 2
Short Sales sold in last year: 3
Current Pending Short Sales 1
Current Active Short Sales 1
For condo/townhomes the numbers are:
Bank owned sold: 2
Bank owned pending sales: 1
Short Sales sold: 3
Short sales pending: 4
Short sales active: 2
As you can see this is not a huge number, especially since the total number of homes sold in Palo Alto in the last year is 369, making distressed sales account for less than 2%. There have been 97 condo/townhomes sold in the same period making the distressed sales about 5% of that market. These numbers are not enough to have any impact on the price of homes in Palo Alto at this point. The percentage would have to increase several fold before Palo Alto prices are affected by distressed properties. I am not saying that this is or is not going to happen, that is a discussion for a future post, just that it has not happened yet.
Keller Williams Realty
*Photo Credit: found this hilarious picture at the website for The Sacramento Bee.