REO’s On The Rise
Lender owned real estate sales are expected to rise this year, with the April 2015 U.S. Foreclosure Market Report showing a rise of 9 percent from a year ago, an 18 month high.
The driving force?
A jump in bank repossessions (REOs). Lender owned real estate sales in April showed an increase of 25 percent from the previous month alone, a 50 percent rise from the last year, a 27 month high.
I thought the crisis was over – is this a new peak?
Not so much. The spike in lender owned real estate sales is still 56 percent below the September 2013 REO peak. Overall, foreclosure starts are decreasing, with filings nationwide consistently below pre-crisis levels. The REOs are simply a continuation of the clean-up phase of the crisis.
Exceptions to the rule…
Florida still has the highest state foreclosure rate – one in every 425 houses – nearly 2.5 times the national average. Foreclosure filings in Nevada, Maryland, and New Jersey are also on the rise.
Uh-oh. What will this do to my sales?
Though distressed sales typically have a stifling effect on the housing market, in this market the distressed inventory is expected to help stimulate sales during the spring and summer buying season as new listings become available in the mid to lower ranges of the market. Better, yet, because it is now a seller’s market, inventory should sell quickly and at a price relatively close to market value. Sale prices this year have come in at about 87 percent of estimated market value on average, with listings in some cities at nearly full value. This uptick is viewed by some as part of the natural trend toward equilibrium and a more stable market.
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