Short sales rose from 17% of all sales in Feb to 19.6% of all sales in March and continue to outpace REO's. This is good news for Realtors and homeowners and I take it as an indicator of a couple positive trends.
1. Buyers are more willing than ever to consider short sales as options for them to purchase
2. Realtors, on both sides of the transaction, are becoming more informed about short sales and less afraid of the problems that can be associated with them.
3. Banks are getting more files approved more quickly. Without banks' continued improvement of the short sale process, this number does not rise the way it did.
The short sale niche has produced billions of dollars of real estate commissions in the past few years, saved banks billions of dollars and enabled hundreds of thousands of homeowners to avoid foreclosure.......and thereby be eligible for purchase again in just a few years. It is good to see that the industry is improving in this niche.
Here is an excerpt of the press release courtesy of DSNEWS and The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions.
An industry study released Monday shows that nearly half of home sales activity last month involved distressed properties, a trend that is likely to continue as the backlog of foreclosures and mortgage defaults make their way through the pipeline.
Within this distressed property segment, the market analysis shows a boom in short sales during the month of March to record-high levels and a drop in the proportion of damaged REO.
These deductions come from the HousingPulse Tracking Survey generated by Campbell Surveys and Inside Mortgage Finance.
The survey's overall distressed property index rose to 48.6 percent in March - the second highest level seen in the past 12 months.
Short sales rose from 17.0 percent in February to a record-high 19.6 percent in March. Over the same period, damaged REO fell from 14.9 percent to 12.0 percent.
The report referred to both developments as "a positive sign" for the market.
Short sales can eliminate the sometimes long periods of time a home sits vacant after it is repossessed by the lender after foreclosure, and because damaged REO has the worst effect on comparables used for appraisals, smaller amounts of damaged REO should be a positive for home values in future months.
Takeaway: For those that have their finger on the pulse, this is no surprise. However, the debate may be in how long this trend will last. The stats reveal such a huge backlog of distressed properties that should be short sold rather than foreclosed on. And, the pressure to avoid foreclosure from the government is increasing daily. Short sales will not be "short-lived" as a well known REO advocate said recently at a large national REO convention.