Data released by RealtyTrac reiterated the housing market being on the road to recovery. The total number of foreclosed properties sold in the first quarter of 2013 fell 18% sequentially and 22% from the prior-year quarter to 190,121 properties.
Of the total foreclosed properties sold, 88,750 were at pre-foreclosure state (down 20% both from the prior quarter and the year-ago quarter), while 101,371 were bank-owned (down 16% sequentially and 23% year over year). The primary reasons for the decline in foreclosed home sales were rebounding home prices, less number of properties getting foreclosed and low mortgage rates over the past few quarters.
The sale of pre-foreclosed and bank-owned residential properties (REO) was 21% of the total residential sale, inching down from 25% in the year-ago quarter. Moreover, Ga. recorded the highest foreclosed property sales as it accounted for 35% of all residential home sales, followed by Ill. (32%), Calif. (30%), Ariz. (28%) and Mich. (28%).
Moreover, these properties were sold at an average price of $167,095, which was 30% below the average price of a home not in foreclosure. Further, pre-foreclosed properties were sold within 382 days on an average, after passing through the foreclosure process, while it took an average of 168 days to sell properties owned by banks after being foreclosed.
Further, non-foreclosure short sales of properties (accounting for 15% of all residential sales) plunged 10% from the previous quarter and 35% from the year-ago quarter. Short sale is a process where the sales price is below the estimated amount of all outstanding loans of a property. Given the rise in home prices, both lenders and underwater homeowners are shying away from short sale.
The fall in foreclosed home sales also resulted from a decline in overall foreclosure activities. In addition, mortgage servicers and the government have been switching to other options to prevent foreclosures. However, as the major servicers – JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC), Citigroup Inc. (C), Ally Financial Inc. and Wells Fargo & Company (WFC) – adjust to the new rules set under the National Mortgage Settlement as well as several other state laws, foreclosure activity will likely rise in the near-term.
However, home prices across the nation are expected to rebound driven by modest recovery in economic environment and a fall in unemployment rate. With the borrowers able to repay their mortgages, there are chances of lesser number of foreclosed properties entering the market. This in turn will likely aid the revival of the housing sector.
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