26% of home sales are foreclosures and short sales
According to a RealtyTrac report released yesterday, 26% of all homes sold last
year were foreclosures and short sales. Homes already foreclosed on and
repossessed by banks, called REOs (real estate owned), sold for an average of
36% less than normal sales, RealtyTrac reported. Meanwhile, the discount for
homes sold while they were still in the foreclosure process (short sales) was
15%. "It's like the post-holiday sales at Sear's where they're trying to clear
out unwanted inventory," said Tony Sanders, a real estate professor at George
Mason University.
Nevada had the highest percentage of distressed sales of any state at 57%. That
was, however, less than 2009, when 67% of sales there were foreclosures. In
Arizona, 49% of sales were distressed properties; in California, 44%; and in
Florida, 36%. Foreclosed properties sold for the biggest discount -- 50% off --
in New Jersey. These investment opportunities are not going away. Nearly 30% of
mortgage borrowers are underwater on their loans, owing more than their homes
are worth, according to Stan Humphries, chief economist for Zillow, the real
estate web site. These owners are very vulnerable to foreclosure so the number
of distressed properties that will go on sale only the next year or two will
probably remained high.
