Several months ago the SoCal MLS required agents to specify whether a listing was a short sale or not. It took a while for all listings to be updated, but now this is working well.
There are currently 1140 SFR homes for sale in Long Beach, 302 are designated as short sales, 838 are designated as NOT short sales. 302 + 838 = 1140. So all listings are are present and accounted for.
But how important are short sales in the the Long Beach marketplace? 302 of the 1140 total active listings is 26% of the market. But is it really that high, when we talk about closed sales? I don't think so.
Two factors will make short sales appear more important that they are.
1) Short sales sit on the market longer. If a good salable listing comes on the market and sells in 10 days but a short sale sits on the market for 100 days awaiting lender approval, it might appear that there are 10 times as many short sales compared to conventional listings, based on exposure. While it may not be 10:1, short sales certainly are take more time to sell, if they sell at all. Which leads to the next point.
2) If they don't sell, then the listing is just noise, not actual market activity. Anecdotally, I hear that only about one in five short sales goes through.
So an estimate that short sales are less than 10% of the SFR market here in Long Beach, is just that, an estimate, but it may actually be less.
Once the accuracy of the Short Sale data starts working its way through to Closed Sales, we will really see how important they are.
My point is to focus on real activity. There is such hype about short sale this, short sale that. When in fact they just distract buyers and agents from acheiving their goals.
They appear important because some seem to be great deals and many clog up the MLS, when in fact short sales may be just a mirage.
Read my Current 1st Quarter Newsletter for 2008 - Home Prices Drop Double Digits on only 4 Months! http://www.lbre.com/pages/news/2008/prices_drop_double_digits.html
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