The world of distress sales deals is changing. First it was REOs. Then foreclosures bought at auction. Now, short sales are showing signs that soon they’ll be going to way of the Stegosaurus. RealtyTrac reported that short sales in June accounted for 14 percent of all residential sales, down from 15 percent in May but up from 8 percent a year ago. The National Association of Realtors reported short sales have lost half their market share in the past year falling to just 6 percent of total sales in July, down from 12 percent in July 2012. Just two years ago, short sales were coming into their own. Pushed by homeowners and real estate agents, lenders reluctantly agreed to eat large amounts of mortgages to get delinquent properties off their books. Not until it was painfully clear they were losing more by waiting for foreclosure processing crippled by the processing scandal than by cutting their losses with a short sale. Here are some of the reasons for the short life of short sales: There were only about 49,000 completed foreclosures in the U.S. in July 2013, down from 65,000 in July 2012, a year-over-year decrease of 25 percent, according to CoreLogic. The pool of potential short sale candidates is still big, but steadily shrinking. Negative equity has continued to steadily decline, freeing homeowners from the need to do a short sale. This week RealtyTrac reported that only about 10.7 million residential properties are deeply underwater, with an LTV ratio of at least 125 percent, representing about 23 percent of U.S. residential properties with a mortgage. That’s down from 11.3 million deeply underwater properties representing 26 percent of all residential properties with a mortgage in May and down from 12.5 million deeply underwater properties representing 28 percent of all residential properties with a mortgage in September 2012. The pool is shrinking by about 1 million a quarter or 2 percent of mortgaged homes. Nearly one in four homeowners who are in the foreclosure process today has at least some equity, giving them a better chance to avoid foreclosure without resorting to a short sale — assuming they realize they have equity and don’t miss the opportunity to leverage that equity. Federal programs have reduced the numbers of potential short sellers. As of June, more than1.2 million homeowners have received a permanent modification through HAMP and 2.6 million of refinanced, many of whom, were underwater, to lower their monthly payments and reduce their risk of foreclosure or short sale. Despite their declining numbers, where they are abundant, short sales can be a good ideal. Like foreclosures, you can count on short sales being more available, and easier to buyer than ever, in markets in judicial states, especially Florida. However, the day is coming when short sales will be a rarity as they were before the crash.
Posted on: Fri, 06 Sep 2013 17:59:13 +0000
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