Locals Only? How Foster City's Real Estate Market Compares to the Nation's Real Estate Crash

Here’s a good example of why I always urge Bay Area residents to read between the lines: Since the first stirrings of the real estate implosion, in early 2008, national (and often local) media have seized the opportunity to make this crash the most dramatic crash ever. Make no mistake; there’s been plenty of drama to go around. One thing to remember, though, is that all real estate is local – an especially important consideration in the modern, 24-hour news cycle world.

For example, earlier this week Yahoo News reported that RealtyTrac, a real estate information web site, had determined that 28% of all home sales during the first quarter of 2011 were foreclosures.  Drilling down further, RealtyTrac stated that 45% of all sales in California and Arizona during the first three months of this year were foreclosures. In Nevada, 53% were foreclosures.

At the end of this morass are a couple of disturbing thoughts: according to RealtyTrac, there is presently a three-year inventory of distressed properties waiting for buyers. When they sell, they will fetch approximately 35% less than “normal” homes. That’s 1.9 million homes looking… well, looking for a home, at discount prices. It’s enough to turn your stomach if you’re a potential seller– or to start you counting the all of the eye-catching “Market Tanks!” headlines you will be reading from now until 2014.

Take a deep breath. Repeat the mantra: all real estate is local.

One out of every 240 properties in California is presently either in foreclosure or heading toward it. That’s pretty bad. But “California” includes Stanislaus County, San Joaquin County and Sacramento County, where one out of every 136 (Stanislaus), 138 (San Joaquin) and 152 (Sacramento) properties is in trouble. Terrible numbers, until you compare them to Clark County, Nevada’s one in 82 – the nation’s worst.

Now lets look at the situation here, in San Mateo County. For Q1, 2011, one of every 457 homes was distressed. In Foster City, one in 839 was in some stage of foreclosure.  While those figures won’t provide the kind of peace presently felt in Vermont (one of every 62,849 homes in foreclosure), it also isn’t the kind of data that translates to three years of foreclosures in the pipeline.

In fact, for April, notices of default (the first step on the road to foreclosure) in Foster City were down 53% from March and 33% from April, 2010. Six notices were filed in April, the community’s lowest total since August, 2010. Foster City’s total inventory of foreclosures was 22 in April. Its number of pre-sale distressed properties (they’ve already received Notice of Trustees but have not yet been sold, either to the bank or to a third party) was 25. There were 31 homes in pre-foreclosure. That’s a total of 78 affected homes. In March there were 123.

It’s not great, but for perspective, compare Foster City’s situation with that of Lathrop, a San Joaquin County town whose population of 17,000 is approximately two-thirds that of Foster City. As of April, Lathrop had 153 bank-owned homes on its books. Another 115 had filed Notice of Trustee documents and 106 were in pre-foreclosure. This time last year there were 446 total distressed properties in Lathrop. In a year, they’ve only reduced their load by 14%.

Nobody is getting out their straw boater, climbing on top of a Model T and singing “Happy Days Are Here Again.” 78 distressed properties is still a troubling number. Foster City isn’t Vermont yet. In an age where headlines regarding the housing industry are delivered with the blowback of a 1980s Maxell commercial, however, it’s important to keep things in perspective. Context is everything.