The number of Costa Mesa homes for sale which are actually being purchased has declined substantially in the most recent tracking period, even as authorities report a higher proportion of fraudulent ‘short sales’ on distressed properties. According to an August 17, 2010 article from the Orange County Register, “Southern California home sellers experienced the biggest annual drop in sales last month in more than two years, due chiefly to the virtual ending of federal tax credits a month earlier, MDA DataQuick reported today. DataQuick reported that 18,946 housing transactions closed in July. That’s down about 20% both from June and from July 2009. It was the steepest year-over-year decline in SoCal sales since March 2008. The median home price, meanwhile, dipped from June but was up 10% from a year ago. In addition, DataQuick reported…Last month’s sales decline was three times greater than the typical June-to-July drop (6.7%). Last month’s sales total was 27.4% below the July average dating back to 1988. Last month was the slowest July since 2007 and the second-slowest since July 1995. Sales fell in all six counties in the region, ranging from a 10.5% drop in Ventura County to a 28% drop in San Bernardino County. The median home price, or price at the midpoint of all sales, was up in every county but Ventura.”
Nearly two in every hundred short sales are fraudulent, according to a second article from the Orange County Register. This means that an increased proportion of Costa Mesa homes for sale are the product of predatory lending and other practices. The report by Jeff Collins stated that “Short sales are tough enough these days without this latest bit of news. Just this week, Altera Real Estate’s Steve Thomas reported that the backlog of Orange County short sales is dizzying. About half of O.C. short sales — or sales in which a home is sold for less than is owed on the mortgage — take two months or more to get a lender’s approval, Thomas reported. Now comes a report from Santa Ana-based CoreLogic concluding that lenders have one other thing to be cautious about: Short sale fraud. The study concluded that: 1.9% of all U.S. short sales over the past two years — roughly 15,000 nationwide — are fraudulent. That’s one out of every 53 deals.”