The decrease in foreclosure-related sales is due in large part to a decrease in foreclosure activity. But the decline in non-foreclosure short sales was “surprising,” according to Realty Trac vice president Daren Bloomquist, given that 11 million homeowners have negative net worth.
Foreclosures and bank property sales fell 18% in the first quarter to 190,121, according to the latest report from Realty Trac. This is down 22% from the first quarter of 2012. Foreclosures and short sales represented 21% of all residential sales in the first quarter, down from 25% in the first quarter of 2012, and a high of 45% in the first quarter of 2009. Meanwhile, short sales without foreclosures were 10% lower than the fourth quarter of 2012 and 35% lower than the first quarter of 2012. Including retail sales uncovered with no homeowner foreclosures, the proportion of distressed sales reached 36%.
“Rising home prices in many markets are stunting continued short-sales growth by reducing incentives for both underwater homeowners and lenders. “Underwater homeowners may be willing to put up with a few months or even years in the hope of being able to walk away with money at the closing table and without hurting your credit rating, and for lenders a failed short sale will no longer translate into further losses in the future as prices Average bank-owned homes are increasing, at a faster rate. pace than non-distressed home prices in many markets.
Banks are turning to short sale transactions over foreclosures to resolve problems with delinquent homeowners. There are two reasons for this: First, there have been a number of attorneys general in various states who have class-action sued and won large multi-billion dollar settlements from key lenders such as Bank of America, Wells Fargo and Chase for foreclosure practices. defective. Second, the foreclosure process is costly with the involvement of attorneys’ fees and the legal system that currently weighs heavily in favor of defaulting homeowners rather than protecting the banks’ right to dissolve the relationship of an obligation. default mortgage. The short sale process also allows banks to demand higher market prices for the property instead of when the stigma of foreclosure is attached to the property.
The median price of a foreclosure-related sale decreased 1% quarter over quarter in the first quarter to $167,095. Georgia had the highest percentage of foreclosure-related sales at 35%. Meanwhile, in Massachusetts, New York and New Jersey, foreclosure-related sales make up less than 10% of sales. The median price of a foreclosed home was 30% lower than the median price of a property owned by owners who have not been foreclosed.