Home prices may get a boost from a pickup in sales of properties in default before they reach the stage where they are repossessed by the bank and sold.
There has been a shift in banks' willingness to sell a property for less than the mortgage balance to avoid foreclosing,
The transactions, known as short sales, typically change hands at a discount of about 20 percent to homes not in financial distress, compared with a 40 percent price cut for bank-owned homes, according to RealtyTrac. Short sales jumped 19 percent in second quarter from the prior three months while foreclosure sales were flat, the data seller said.
"Banks have become much more supportive of short sales, That's better for the lenders, who have smaller losses on a short sale, and it's going to be better for homeowners, who won't have as mush psychological distress as a foreclosure."
Banks are being more agreeable to short sales as foreclosures slow following a yearlong probe of so-called robo-signing, or pushing through unverified default documents. Foreclosure filings have fallen for 12 straight months through September as banks work through a backlog of paperwork, RealtyTrac data show.
Almost a third of all home transactions in August were foreclosures or short sales, according to the National Association of Realtors. While short sales were flat compared with a year earlier, the trade group's count only includes deals completed with a broker, and short sales often are handled directly with lenders.
Banks are not only approving more short sales, they're doing it in less time. In the second quarter, short-sale homes, also known as pre-foreclosures, sold an average 245 days after default, down from 256 days in the previous period, according to Irvine, California-based RealtyTrac. That reversed three straight quarters of increases.
The time frame remains a lot longer than traditional sales. In a normal transaction, a buyer bids on a home and gets a decision from its owners within days, if not hours. Getting a bank response to a short-sale offer can take two months or more.
Cape Housing Market Thriving
In 2010, Cape Coral led the state in highest number of residential property sales and the new year
is off to a great start. Sales continue to be aggressive, interest rates are historically low and home
prices that remain below replacement cost make this an excellent time to buy.
Here is a brief overview of the Cape's 2010 home sales:
Fewer distressed sales
The number of distressed home sales declined to 62 percent of total sales. In 2009, foreclosures
and pre-foreclosures (short sales) made up 73 percent of the total homes sold. Today's Cape Coral
home inventory is made up of only 35 percent of short sales and foreclosures combined.
Almost 6,000 single-family homes were sold by Realtors. That makes the number of homes sold
in 2010 greater than any single year during the real estate boom (2003-06) and exceeded in
history by only the sales in 2009.
Most under $200,000
Of the homes sold in 2010, 86 percent were sold for less than $200,000, the same percentage
as 2009. In 2010, eight homes sold for more than $1 million, compared to seven in 2009.
In January 2007, Cape Coral had 6,073 single-family homes on the market. Today, we have
2,387 homes. We've enjoyed a steady decline that if sustained will lead to the return of
property value appreciation. Media attention continues to attract investors and future retirees
to our market. Buyers want what we are blessed to enjoy each and every day at perhaps soon
to be gone bargain basement prices.
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