A recent study of the number of home sales in the second quarter of 2011 shows that more than 30 percent of that figure is due to sales of foreclosed homes or homes in various stages of foreclosure. In 2010, that figure stood at only about 24 percent, so there has been a 6 percent increase in the number of homes that have sold that have at least started foreclosure proceedings.
One of the reasons so many home buyers are looking to foreclosed properties is because the sale prices are an average of 32 percent less than comparable homes that are not foreclosures. In addition to that, buyers can typically move into a foreclosure faster and the selling process is much shorter than the process of selling a non-foreclosed property.
But buyers aren’t the only ones who can benefit from the rise in sales of foreclosed properties. There are many distressed homeowners who can benefit from this trend. There are many homeowners who do not qualify for a loan modification or refinancing. This leaves them with very limited options. In some cases, the most obvious and strategic option is to put their home up for a short sale. This gives buyers the lower prices they are looking for as well as a streamlined buying process which means they can move into the home quickly while the home seller avoids full foreclosure. It seems like it’s a win-win situation all the way around.
On the other side of the coin, another study found that the number of homes that went into foreclosure during the second quarter of the year actually dropped. The percentage fell to its lowest point in four years.
Now for the bad news. Despite the fact that more foreclosures are selling and the number of homes entering foreclosure has dropped, the percentage of homeowners who are currently delinquent on their mortgage payment has increased to 8.44 percent which is an increase of 0.12 percent from the first quarter of the year. According to Mike Fratantoni, vice president of research and economics at MBA, the increasing delinquencies is troubling because it shows that there is not sufficient job growth to help bolster the economy. And since new delinquencies often end up as foreclosures, that could only mean that the number of foreclosed homes and properties is going to rise.
Does it ever seem like this vicious cycle is going to end?
Comments
Cheryl
August 31, 2011
I must correct you on your simple difinition of short sale: " This gives buyers the lower prices they are looking for as well as a streamlined buying process which means they can move into the home quickly while the home seller avoids full foreclosure. It seems like itâs a win-win situation all the way around."
This is hardley the case or the problem. The lenders take anywhere from 90 to 200 days to process a short sale. If it were stremlined and allowed quickly we would not have the problems that we do with foreclosre.
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SethR
September 01, 2011
Many are also short sales. Combined, short sales and foreclosures make up more than 30% of all home sales. If you have questions about short sales, I found a great resource at http://www.ShortSaleOpedia.com - good questions and good qualified answers.
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