Foreclosures Becoming Harder to Find

Foreclosure Bargains Getting Harder to Find

Home buyers hoping to snag a really good deal on a foreclosed home are finding it increasingly difficult because supply is shrinking.  The number of foreclosures that are available for sale nationwide fell to 617,000 in December, down from 845,000 in November 2008, reports Barclays Capital.  Not only have attractive homes in popular neighborhoods already been snapped up, but also government help for distressed buyers is delaying more foreclosures.  Demand is driving up prices. Investors say typical prices have climbed from 75 percent of appraised value to 85 percent or higher when there are bidding wars.

Source: The Wall Street Journal, James R. Hagerty (02/23/2010)

The days of having your pick of lender owned homes looks to be coming to an end not just on a nationwide level but also locally.  In the Greater Phoenix area over the last year the number of lender owned homes on the market has decreased over 50%.  In the last few years buyers and investors were scooping up lender owned homes that were at bargain prices.  Because of the number of lender owned homes available, buyers often passed up short sales that were considered a long shot to ever close.  Even after seeing the price many lender owned properties get bid up after receiving multiple offers, it appears the banks are realizing there is still better profits to be made in approving short sales.  Coupled with regulatory pressure, short sales actually closing are becoming more of a common occurrence.  Banks are starting to delay foreclosure in hopes of selling short and as a result the number of active short sales has risen 135% over the last year in the Greater Phoenix area.  In the same time the number of closed short sales has risen over 300%. 
In the Scottsdale and Paradise Valley markets the number of active short sales are higher than lender owned, although non-distressed properties still occupy 70-80% of the market.  There is a belief that the Scottsdale and Paradise Valley markets are only starting to be hit with distressed properties and in the next year there will be an increase in these particular markets.  It is mainly speculation right now, but if true, be prepared for a little extra time and effort for a short sale.