'Normal' home sales vs. distress sales in Baltimore
Real estate information firm First American CoreLogic has good news and bad news for Baltimore-area residents trying to sell a home that's not a short sale or foreclosure.
The good news for sellers: Average sale prices are rising -- up 8 percent in January vs. two years earlier and up 13 percent vs. January 2009.
The bad news: You're not riding the wave of increased home sales.
Seventeen percent fewer traditional resales sold in January than a year earlier in the Baltimore metro area, says First American CoreLogic. Compared with two years ago, the drop in sales is about 50 percent.
But short sales, where owners need lender approval because they're underwater on their mortgage, are on the rise. These deals increased 18 percent year-over-year and have more than doubled in two years.
Bank-owned properties -- foreclosures -- bumped up a modest 1 percent year-over-year, but there were 75 percent more of these sales in January than two years earlier.
All told, distress sales made up a quarter of January home sales in the Baltimore metro area, First American CoreLogic says.
(Like traditional resales, sales of new homes were also down -- but not as much in recent months. The year-over-year drop was 6 percent.)
What about the average sale price for distress deals, you ask?
Here's the average sale price by type in January:
New homes: $392,000
Traditional resales: $278,000
Short sales: $267,000
Foreclosures: $154,00
So foreclosures -- on average -- are by far the cheapest, though they probably also require the most work. It's interesting that short sales aren't far off the average price of traditional resales. Wish we could know if the types of homes that sold in each category average out similarly in terms of size and style.
Buyers: How much of a deal do you think local foreclosures and short sales offer these days? Does it work out to significantly less money even accounting for any fix-up work needed?Categories: Distress sales, The foreclosure mess
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Comments
It's really interesting that short sales are doing so well; when I was looking the long time between submitting an offer and (possible) bank approval was a huge turn off. I wonder if banks are approving more offers, and in more reasonable time periods, just to get what money they can?
Posted by: Mary | April 20, 2010 12:37 PM
I'm glad you mentioned that, Mary -- I meant to write more along those lines and forgot.
I should have noted that short sales, even with the increase, are still less numerous than foreclosure sales (and far less numerous than regular sales). First American CoreLogic counted about 100 in January.
I'm sure there are a lot of would-be short sales out there that have yet to go anywhere.
Posted by: Jamie Smith Hopkins | April 20, 2010 1:09 PM
Hi Jamie, nice to meet you. California, where I live, is experiencing the same thing. Maybe it's because banks are catching on and realizing that they don't lose as much money as with a foreclosure.
Banks have moved like pond water out here and have suffered the losses from such slow movement. It does appear they are moving more quickly with short sales now.
Great post - very informative. Thank you.
Jim Adams - CEO
New Homes Directory .com
Posted by: Jim Adams | April 20, 2010 3:14 PM
I bet banks are trying to approve short sales more quickly, to get as much out of the problem house as possible since the alternative would be foreclosure which is happening all over the place now.
Posted by: Ann | April 20, 2010 10:10 PM
I agree with you, Ann. It's not so much that banks are helping people to not have "foreclosure" in their record, it's that they are benefiting from short sales as much as the sellers.
Posted by: real estate Hanoi | April 26, 2010 3:10 AM
I know all of these issues are nationwide. Here in Florida short sales have taken over neighborhoods and real estate agents and banks have bottomed out prices as low as they can go. Now the real estate agents and appraisers are using short sales as comparables making it worse for non-distressed homeowners to sell their homes-forcing non-distressed homeowners to bottom out their listing prices to competitive rates. It is causing the market here to drop even more - devaluating property faster than anyone can recover.
Posted by: Pam | April 28, 2010 3:39 PM
Pam- THANK YOU for pointing that out. I don't think people who are not completely involved in the housing market understand. We live in Pasadena, MD and we have our house on the market (in a nondistressed situation). We haven't had a ton of foot traffic because there were 3 foreclosures and 1 short sale in our neighborhood forcing us to decrease our asking price a significant amount so far, just to get people in. We have an identical house on the market under a Short Sale status $40K less than our house. Our only hope and prayer is the length of time it will take to close will put people off. We are getting into a situation where we won't be able to sell after paying 6% in realtor fees. Very frustrating.
Posted by: Kathy | April 28, 2010 4:25 PM
Jamie-
The foreclosure price of $154,000... does that include only properties sold at auction, REO, or both? From what I have seen, most foreclosures sold at auction are bought back by the bank and later sold as REO. Can you please clarify? And if those are REO's, are you able to find out what percent are being purchased with cash vs. financing?
Posted by: Frank Rizzo | April 28, 2010 5:47 PM
Frank, it's REO only. (Sorry, I did have that on first reference -- well, "bank owned" -- but reverted to "foreclosure" after that.) First American didn't include any information about how the properties were financed.
Posted by: Jamie Smith Hopkins | April 28, 2010 9:47 PM