It’s definitely times like these where I wish I had a crystal ball!
A real estate professional, Bruce Walter, of Indiana posed this question to me recently:
I am just curious about your HUD homes. Our HUD homes in Tippecanoe County are averaging 101% of the list price for the original owner occupant period. Do you track those figures?
While we don’t have a way to track HUD homes in our MLS, we do have a way to track REO homes. So far in June 2012, REO closings average sale price/list price is 102.35%. Highest is 216.7%
For May 2012 closings I snagged this chart:
We are currently experiencing extreme discombobulation in the Las Vegas real estate market. We have VERY little resale home inventory in Las Vegas. This means bidding wars and feeding frenzies for buyers when new properties hit the market. Short sale closings are outpacing REO (bank owned) home closings for the first time since this housing “crisis” started back in late 2006.
This is with the help of a bill, AB 284, implemented on October 1, 2011. This added additional layers to the foreclosure process and has brought NOD filings almost to a grinding halt as you can see on Foreclosure Radar:
Where are we headed? I can tell you some areas have already exceeded my appreciation expectations for the year and prices have gone up 20%. Some areas that have a higher distressed rate have only appreciated between 5-10%.
I spoke to one of The Force Realty’s short sale home sellers on Friday and she told me a judicial foreclosure was started on her home. I believe that is where we are headed. Investors have no choice with the new law other than begin the judicial foreclosure process.
Hip hip hooray. This means we will have REO inventory in about 1-2 years since the judicial foreclosure process is so streamlined, quick and efficient. (saying that with my tongue in my cheek.)
Until that day comes when judicial foreclosures near completion – or AB 284 is repealed – we will be seeing appreciation. We are at 2004 inventory levels but we will not be seeing 2004 appreciation. This is mostly due to archaic bank pricing of REO properties. I do foresee a good amount of Las Vegas short sale fall-outs in 6 months due to BPOs coming in high with slow negotiations. That will give us more inventory.
Increased prices are the only solution to getting more home inventory in the Las Vegas resale market. Price sensitive buyers will retreat and some homeowners may be pushed out of their underwater situation and other homeowners with equity who have been sitting on the fence may just decide to sell.
Low inventory problem solved.
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