In some West Orange County neighborhoods the number of homes on the market is about double the unlisted properties which are in some stage of the foreclosure process—in others, the distressed properties are much more than the total of all homes currently on the market. In this neighborhood report, we consider the unlisted distressed homes as of June 17, 2010.

Two weeks ago in this column we reported year over year May sales for the West Orange County neighborhoods. As we have frequently reported in our biweekly reports on countywide real estate trends, even though the lower price ranges in OC are a seller’s market, the number of distressed homes is holding down price appreciation. For West OC, the potential impact of unlisted distressed properties on future prices varies sharply by neighborhood.

The areas with the highest proportion of unlisted distressed homes to the total homes on the market could be expected to trend in favor of buyers—i.e. prices are under more downward pressure because sellers are more desperate. Of the West OC communities—from Los Alamitos to Seal Beach—Los Al is the only area where unlisted distressed properties number more than the homes on the market.

In Los Alamitos, as of June 17, there were only 10 homes in the active listings, but there were a total of 17 homes in some stage of the default process. Six of these homeowners have been given a notice of default, generally the first formal step in the process. An additional 10 homes are scheduled for a trustee sale and one home is bank owned.

“The Trustee Sale is a set scheduled date, time and location where the bank attempts to sell the home, which is in Notice of Default, at or above a target bid price,” Glenn Gaspar, First American Team Realty, told www.OC180NEWS.com. “Anyone interested in buying a particular home at this period of the foreclosure process can do so, but must purchase the subject property in cash--no loans are allowed, just hard cold cash. Should no one make an offer high enough to cover the published bid, the subject property will then go back to the bank and that is when the home officially becomes a Bank Owned Property, or also known as a REO (Real Estate Owned).”

At the other end of the spectrum, are areas where the number of unlisted distressed properties is well below the number of homes on the market. These areas may be trending toward a seller’s market because distressed properties are not representing a price lid. Leisure World, Seal Beach, is a good example. There are 202 units on the market in Leisure World, but only one home is listed as in distress.

Of the West OC communities we analyzed, beside Leisure World, Old Town Seal Beach has the next lowest percentage of unlisted distressed properties to active listings. With 22 houses on the market in Old Town, and only 4 unlisted distressed properties, the percentage is only 18%. Thus, it would not appear that pending foreclosures are representing much of a factor in Old Town.

The next higher percentage of unlisted distressed properties to total listings is College Park East in Seal Beach, where there are 17 units on the market. With 3 homes in notice of default, four set for trustee sale, and two bank owned, the percentage is 53%.

Rossmoor is next up the scale with unlisted distressed properties representing 76% of the active listings. Here there are 38 homes on the market and a total of 29 unlisted distressed units. Of these, 11 have a notice of default, 15 are set for trustee sale, and 3 are bank owned.

The highest West OC percentage of unlisted distressed properties to total listings, beside Los Al, is the “other” areas of Seal Beach—not Leisure World, Old Town, College Park East and West. Here there are 15 homes on the market, and a total of 13 unlisted distressed homes. That means 87% of the listed properties could be replaced with future distressed sales and thus provides a price lid. Four of the distressed homes have received notices of default, six are set for trustee sale, and three are bank owned.

Realtor Gaspar told us “the back log regarding unlisted troubled home loans, when they hit the market, can and will push home prices down should demand remain status quo.” So far this year, the countywide demand trend peaked weeks ago and has been trending downward ever since. See our biweekly report on countywide real estate trends.

There was no active listing for College Park West and only one unlisted distressed unit. This home has received a formal notice of default.

All of the data in this article was supplied by Glenn Gaspar, REALTOR® with First American Team Realty, Inc.

Return to www.OC180NEWS.com next Monday for our continuing biweekly series on countywide residential real estate supply and demand trends.