Up, Up and Away, no not the Jimmy Webb song written in 1967 and not the 2000 Disney movie about a boy who doesn’t have super powers, but maybe we wish he did. To the contrary, Up, Up and Away is a reference to our real estate market and the penetration of short sales which according to foreclosure research firm RealtyTrac, have increased 25% over the past year.
Not all short sales are necessarily bad; there was a 16% increase in homes acquired prior to foreclosure, which directly reduces the potential inventory of foreclosures.
As we’ve heard before, the makeup of distressed real estate sales has been a growing proportion of total real estate sales, now accounting for 26% of all U.S. home sales in the first quarter.
If Up, Up, and Away is the nomenclature for short sale activity, Slip, Slide and Away would be the reference to pricing. The average price of homes in foreclosure is 27% less than the average sales price of nondistressed home sales.
"Foreclosure-related sales picked up in the first quarter, particularly pre-foreclosure sales where a distressed homeowner is selling to avoid foreclosure — typically via short sale," said Brandon Moore, chief executive officer of RealtyTrac.
"Those pre-foreclosure sales hit a three-year high in the first quarter even as the average pre-foreclosure sales price dropped to a record low for our report. Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions."
Much like in-laws who come to visit and announce they’ll be staying for a little while, these short sales and foreclosures show no signs of leaving any time soon.
Michael Hobbs, PahRoo Appraisal & Consultancy
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