The housing market appears to becoming more efficient RealtyTrac reported that the share of homes in some stage of foreclosure dropped 5 percent from the first quarter of this year to 31 percent in the second quarter. Additionally, the average sales price of bank-owned (or “REO”) properties was discounted another 4 percent (to 40 percent from 36 percent) below the average sales price of a non-foreclosure home in the second quarter, while the average sales price of a preforeclosure home (often sold in a short sale) also dropped 4 percent to 21 percent from 17 percent in the first quarter.
James Saccacio, RealtyTrac CEO, is quoted as saying that the reduction in the share of homes in some stage of foreclosure, the bigger discounts being applied to preforeclosures and a shorter sale cycle for preforeclosures “all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales… which gives distressed homeowners who do not qualify for loan modification or refinancing… a better chance of completing a short sale to avoid foreclosure… and give lenders the opportunity to more pre-emptively purge nonperforming loans from their portfolios.”
At the same time, according to an article in RealtyTimes, foreclosures are back down to 2007 levels due in part to the fact that fewer foreclosures are being initiated by the lenders, giving borrowers more opportunity to find solutions to keep their homes or avoid foreclosure in other ways.
The article also cites a recent report by the Mortgage Bankers Association (MBA) that shows that although the number of delinquent mortgage borrowers (people who have missed at least one payment) rose in the second quarter, the number of loans that are delinquent more than 90 days dropped. That’s good news, as it is those distressed mortgages that are more often moved by the lender into a repossession process.
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