IF YOU are looking for bargains on foreclosed houses, you are not alone and are probably having a harder time finding them.
When the housing market crashed in 2007, a wave of foreclosures accelerated the plunge in prices, which created the biggest down spiral of home prices in history — worst than the depression.
Now with the pace of new foreclosures slowing, mortgage rates falling and home sales perking up, those once-in-a-lifetime bargains are fading from the market.
The number of US homes repossessed by lenders last month fell 11 percent from January and declined 29 percent from February last year, tumbling to the lowest level since September 2007, foreclosure listing firm RealtyTrac Inc. said Thursday.
All told, 45,038 US homes completed the foreclosure process in February. That’s less than half of the 102,000 homes lost to foreclosure in March 2010, when home repossessions peaked, according to the firm’s records, which go back to January 2005. Now we are seeing home prices back in 2002-2004.
The supply of homes has been dwindling. That has bid up existing house prices, particularly at the lower end of the price spectrum and even medium to high end prices are seeing shortage especially in high demand areas.
Nationwide, the median price of a new home was up by 17 percent in August compared to a year ago. For existing homes, the median price was 9.5 percent higher.
The foreclosure slowdown continued last month, according to the latest data from research firm RealtyTrac, which showed new filings hit a five-year low.
I believe that the problem in the Real Estate Market is some what contained and safe to say were past the worst of it at a national level.
In the first nine months of 2012, 1.4 million homeowners who had been underwater on their mortgage, or owed more than their home is worth, were moved into positive equity, according to data from CoreLogic.
Lenders are more eager to allow Short Sale to occur due to prices rising even on discounted homes.
Foreclosure starts fell in 31 states, with the biggest drops in California, Arizona, Michigan, Georgia and Texas. Those are among the so-called non-judicial states, in which court approval isn’t required for foreclosures. In some states where court approval is required, concerns about sloppy paperwork processing by lenders has prompted tougher reviews of home seizures.
Fewer new foreclosures means fewer unsold homes on the market, a glut that helped drive prices lower during the worst of the housing bust. As the pace of sales has picked up and the volume of unsold inventory has fallen, so has the backlog of houses for sale. The supply of listings has fallen from an average 9.4-month supply in 2010 to 6.1 months in August, the latest data available from the National Association of Realtors.
“There is a shortage of inventory — as crazy as it sounds to say that,” said Daren Blomquist, a RealtyTrac spokesman. “In a lot of market there’s less inventory of foreclosed properties than there is demand. You’re hearing about multiple bids for these properties.”
At the same time, demand for foreclosed homes has risen during the housing bust, in part because the stigma once associated with bank-owned properties has faded somewhat.
Sales will definitely be slower due to fewer inventory and more buyers fighting for lesser properties. Buyers with minimal down payment are being driven out of the market because most of the accepted offers from sellers had been either all cash or a substantial down pay. But buyers don’t loose hope, the market will always correct and I suspect by mid summer we should have an average of a possible 7 month supply average. Be patient and do not chase after an offer if you don’t have to or don’t settle for a house just because you think nothing else will be coming to the market.
Remember, the market will always come around.
The latest evidence came this week with the Federal Reserve’s “Beige Book” report on regional economic conditions, which showed the housing recovery picking up steam in some districts.
After the bubble burst, bargain-priced homes were available on both new and existing houses. One measure of the “foreclosure discount” is the difference between the median price of existing and newly-built homes.
Prices are still heavily discounted on properties in bad repair, including that that have been unoccupied and poorly maintained. But these properties might only allow cash buyers.
Given the monthly pace of home repossessions through February, Analyst projects there will be 600,000 completed foreclosures this year, down from 671,000 last year.
Analyst also expects the number of homes taken back by lenders to increase later this year, noting that 1.2 million homes entered the foreclosure process in 2012. Typically, about half of those end up as bank-owned homes.
While lenders took back fewer homes last month, the number of properties that entered the foreclosure process in February increased 10 percent from the previous month, RealtyTrac said.
For those feeling the pinch or still in hardship, these numbers wont mean a thing. You will still need to find a solution for your problems and fast.
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Please call Ken Go of 1st Innovative Finance at (562)508-7048 or write to [email protected] to discuss options for either refinancing your home to historic low rates or to find ways to modify your home.