Southern California Real Estate Market Trends

Southern California Real Estate Market Trends - Interview with Christian Walsh of WIRE Associates

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TJones (0:12) - Christian, would you mind telling us a little bit about your real estate background?

CWalsh (0:16) - Yes, sir. I grew up in real estate. My father was a custom home builder back in small-town Ohio. Eventually, I moved out to the West Coast because I took one trip and fell in love with the weather and opportunity. Got into real estate about 15 or 16 years ago, just in time to deal with the global financial crisis and short sales listed some bank-owned homes, continue to cut my teeth, and here we are in a whole new real estate cycle right now.

TJones (0:46) - Yeah, speaking about real estate cycles, what are you currently seeing in the southern California West Coast Housing market?

CWalsh (0:52) - Yeah. So it was for the distressed property side. It was relatively uneventful during COVID because of the foreclosure moratorium. After that ended, we've seen things start to tick up, and it's finally interesting to track the data. I've been doing my monthly reports, and we're starting to see the increases in the notices of default, which will ultimately lead to increases in notice of trustee sale and an increase in trustee sales.

TJones (1:21) - Awesome. And, can you elaborate on what a notice of default is in Southern California?

CWalsh (1:26) - Yeah, absolutely. So California being a non-judicial foreclosure state, doesn't go in front of a judge. It's handled by the trustee on behalf of the beneficiary, the process of foreclosure. So when a borrower misses a payment, the quickest that the trust can issue the first notice, which is a notice of default. It's 120 days. Then 90 days later, the notice of trustee sale and the sale itself can be 21 days after that. It always takes longer than that. But that would be the quickest process.

TJones (2:00) - Can you elaborate on a nonjudicial versus a judicial state, if you wouldn't mind?

CWalsh (2:04) - Yeah. So essentially, judicial foreclosure, that process, you go in front of a judge. So that's where it's easy. You just think judicial judge. So the judge is going to handle that. That process can take much longer when you start to get a big influx of properties that are going through the foreclosure again. California Nonjudicial, it's a relatively quicker process, but don't forget, the national average for foreclosure across all states is well over 800 days. So this is not a quick process anywhere in the United States?

TJones (3:12) - Wow. So based on what you've seen at the end of 22 and how 2023 has started, what are your expectations for the rest of the year, with distressed assets like foreclosures?

CWalsh (3:20) - We're going to start to see more distressed assets get through the entire process to foreclosure. So the REOs, the bank-owned properties, will see that go up, and we're going to see more notices of default coming. We're going to see more people go into the foreclosure process. But the major difference between this and what we had last time and the big bust is this time around, there's equity, the property owners have equity for the most part because we had a huge run-up in equity. In fact, it's almost like the exact opposite of what happened in the global financial crisis, where they had a huge downslope in equity. So this time around, there's equity. So a lot of the people going into foreclosure who've missed payments could theoretically sell before getting all the way through the foreclosure process.

TJones (4:09) - That's great. Yeah, I think we're seeing something similar in South Florida as well with the amount of equity in properties and how much appreciation the last couple of years.

CWalsh (4:20) - Exactly. And that's the way it is across the nation now for the foreclosure process. And that's where a tool like foreclosure.com is so handy because you can see the notice of default filed, you can see the property, and again, in many cases, the property may still have equity, but this is somebody that is going to lose some of that, that equity. If they go through the foreclosure process, it's expensive for a homeowner. So that would give an opportunity, just one of many opportunities with foreclosure.com data would be to reach out to those who have notice of default filed and let them know that it's expensive to be foreclosed on. So as a favor and helping them, you can help them, sell their property, and release that equity without losing that equity.