In five of the seven cities that break out short sales, there are now more short sales than foreclosure sales!
Economist Tom Lawler also wrote today: Plunge in Foreclosures Pushes Up REO Prices/Down REO Price Discounts
ForeclosureRadar released its April Foreclosure Report, which covers foreclosure activity in Arizona, California, Nevada, Oregon, and Washington. According to the report, foreclosure starts fell sharply in April in all five states, and completed foreclosure sales declined in all five states, with sizable drops from March in all states save for Washington. And in Arizona, California, and Nevada, record high percentages (44.6%, 41,1%, and 50.7%) of completed foreclosure sales were sold to third parties, rather than becoming bank REO. In its write-up, FR lamented that “we are seeing unprecedented government intervention into the foreclosure process leaving underwater homeowners in limbo, while stealing opportunity from investors and first time buyers." In discussing the “stolen opportunities,” FR noted that “In both Arizona and Nevada winning bids on the courthouse steps on average equal the current estimated value of those properties,” and that “(i)n California the discount between market value and winning bid have on average declined to 12.3 percent” – substantially lower than a year ago. According to FR, “(t)his leaves investors who intend to resell their purchases with record low profits after eviction, repairs, and closing costs.”
An increasing number of investors, of course, are buying REO with plans to rent the properties out, which has not only intensified demand but has reduced the supply of homes offered for sale.
| Short Sales Share | Foreclosure Sales Share | Total "Distressed" Share | ||||
|---|---|---|---|---|---|---|
| 12-Apr | 11-Apr | 12-Apr | 11-Apr | 12-Apr | 11-Apr | |
| Las Vegas | 29.9% | 23.8% | 36.9% | 46.3% | 66.8% | 70.1% |
| Reno | 32.0% | 31.0% | 26.0% | 38.0% | 58.0% | 69.0% |
| Phoenix | 25.2% | 19.7% | 18.8% | 44.5% | 44.0% | 64.2% |
| Sacramento | 30.4% | 22.2% | 30.3% | 44.6% | 60.7% | 66.8% |
| Minneapolis | 10.9% | 10.0% | 32.0% | 43.3% | 42.9% | 53.3% |
| Mid-Atlantic (MRIS) | 12.2% | 11.8% | 11.0% | 20.9% | 23.2% | 32.7% |
| Orlando | 29.4% | 25.4% | 25.5% | 40.2% | 54.9% | 65.6% |
| Northeast Florida | 38.1% | 50.3% | ||||
| Hampton Roads | 31.0% | 35.0% | ||||