CNBC recently reported that 1/3rd of all Homeowners nationwide have more mortgage debt than their home is worth… otherwise known as being upside down on their mortgage. Other local reports have estimated that more than 33% of Orange County homeowners are upside down on their homes as well. In Las Vegas the picture is much bleaker, in reports showing up to 70% of all homeowners owe more in mortgage debts than their home is worth.
The Orange County situation is an interesting one. On the one hand, the market is red hot in the lower price ranges given that the rate of sales has surged up to levels not seen since 2005′, while inventory has dropped to very low levels. All the while, distressed home sales are at an all time high. Below is a table showing home sales in Orange County for the past 5 years. This tabulation below shows overall home sales, compared to financially distressed homes sales for each calendar year, and the ratio of distressed sales to all sales.
ORANGE COUNTY HOMES SALES AND DISTRESSED HOME SALES
| Year | All Home Sales | Distressed Home Sales | Ratio of Distressed to All |
| 2009 | 27,789 | 13,180 | 47% |
| 2008 | 23,650 | 8,902 | 37% |
| 2007 | 21,388 | 617 | 2.8% |
| 2006 | 29,227 | 114 | 0.30% |
| 2005 | 42,253 | 89 | 0.20% |
Distressed sales have grown exponentially since 2005′, and now represent almost 50% of all home sales in Orange County. Approximately 20% of the financially distressed sales are Bank REO foreclosures, and the remaining 80% of distresses sales in Orange County are Short Sales. Many homeowners are now finding that a Short Sale is the preferred solution to a difficult financial situation, as compared to foreclosure.
The question most people ask is when will this all end?… Only the financial gods know for sure, but based upon our local knowldege and research, we expect distressed sales to possibly rise a little bit more in 2010, and then slowly decline in volume in the following 3 years after 2010.
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