Lenders slash prices to dump foreclosures, days of multiple offers return

[Gunny]

Associated Press
updated 1:18 p.m. CT, Sun., June. 8, 2008

Lenders stung by the housing bust are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars in some places that harken back to the market's go-go years and may signal the bottom is near.

The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously. Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.

more ... Lenders slash prices to dump foreclosed homes - Mortgage Mess - MSNBC.com

 

[waltky]

Lookin' for a good deal? - buy a foreclosed home...

Discount for Foreclosed Homes Widened in 2010
Thursday, February 24, 2011 - The gap between the average sale price of a foreclosed home and that of other properties grew wider last year, giving homebuyers who snapped up bank-owned homes big discounts.

And homebuyers can expect to see more of those bargains this year, because fewer foreclosed homes were sold in 2010 than were taken back by banks, foreclosure listing firm RealtyTrac Inc. said Thursday. Buyers who purchased a foreclosed home last year got, on average, a 28 percent discount to a non-foreclosure sale. That's up from a 27 percent average discount in 2009, RealtyTrac said. While only a slight increase, the trend suggests a widening price spread between foreclosure sales and other types of residential properties.

Foreclosed homes made up nearly 26 percent of all home sales last year, according to RealtyTrac. That's down from 29 percent in 2009 but up from 23 percent in 2008. Traditionally, foreclosures account for less than 10 percent of all home sales. In all, 831,574 foreclosed properties were sold last year, including those in some stage of foreclosure but not yet taken back by lenders, the firm said. That's down 31 percent from 2009 and down nearly 14 percent from 2008. Sales of homes outside of the foreclosure process declined nearly 19 percent in 2010 from the prior year, according to RealtyTrac.

While the pace of foreclosure sales slowed, lenders stepped up their home repossessions, taking back more than 1 million homes last year. That deepened the so-called shadow inventory of foreclosed homes that have yet to hit the market. Experts contend that the housing market won't fully recover until banks find buyers for those properties. "We need to clear out the inventory if the market is going to come back," Rick Sharga, a senior vice president at RealtyTrac.

Banks are reluctant to put too many foreclosed homes on the market at once, because they would face booking sizeable losses on the sales. Generally, about 30 percent of banks' foreclosure inventory is on the market, Sharga said. More foreclosure sales, however, would almost certainly send overall home values lower in many markets, because foreclosed homes often sell at a sharp discount to other properties. Already, housing experts predict home prices will slide another 5 percent this year. "You could have a scenario where housing prices could be pushed lower," Sharga said.

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[william the wie]

Let the good times roll. There is a bottom in the Marianas strait.

 

[skeptic]

Associated Press
updated 1:18 p.m. CT, Sun., June. 8, 2008

Lenders stung by the housing bust are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars in some places that harken back to the market's go-go years and may signal the bottom is near.

The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously. Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.

more ... Lenders slash prices to dump foreclosed homes - Mortgage Mess - MSNBC.com

Domestically a very important topic. But hardly of consequence in the broader scheme.

If only real estate would find it's bottom tomorrow. But then again be careful what you wish for.

 

[Toro]

I'm hearing of bidding wars in the Tampa Bay, Sarasota areas.

 

[waltky]

Home prices fall near 2009 low...

Home prices near a double dip
March 29, 2011 -- January home prices fell for the sixth month in a row, edging closer to a double dip.

"January brings us weakening home prices with no real hope in sight for the near future," says David M. Blitzer, a spokesman for S&P. The dismal report followed other negative housing market indicators recently. Sales of existing homes were off nearly 10% in February and new homes sales were at a record low. "The housing market recession is not yet over," said Blitzer, "and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing."

Pat Newport, a housing market analyst for IHS Global Insight sees little prospect of a turnaround. "There's just a lot of inventory glut out there," he said, "and that's why housing prices are dropping. The low prices help clear out the glut." Anthony Sanders, director of Real Estate Entrepreneurship at George Mason University, pointed out that home prices have fallen despite extremely low interest rates, which have dramatically reduced monthly mortgage costs for buyers. "If interest rates climb, that could be the tipping point into the double dip," he said.

Eighteen of the 20 markets covered by the survey recorded year-over-year price declines. Washington, D.C., reported the only substantial increase, up 3.6%, while San Diego edged 0.1% higher. Prices fell 9.1% in Phoenix, compared with January, 2010, more than any of the other markets covered. Detroit dropped 8.1% and Minneapolis fell 7.6%. Newport expects the price drops to continue most of the year, and says that it's only a matter of time before the market enters a double dip. "I think prices will drop another 5% to 10%," he said. "The double dip will hit in the next couple of months."

Source

 

[william the wie]

Here's the way it works based on the early stages of the S&L bailout, a much smaller downturn:

The sale of foreclosures lowers prices.

Here is where it gets tricky. Lower prices drive at least three independent effects:

Investors stop paying on their worse performing properties while collecting rents to spend on tax sales and foreclosures and try to do so without screwing up rental revenues. Since literally all investors are trying to do the same thing at the same time the probability of turning whole neighborhoods into abandoned housing is high.

Two boarded up houses in the same subdivision of say 200 houses will drop property values on all of the houses. Current vacancy rates are significantly higher than the 10% frictional vacancy rate that has little effect on prices so long as time vacant stays relatively short. But once the first house gets boarded up to prevent theft and vandalism the ball starts rolling towards slum.

A lot more people will go upside down as housing prices go down but as long as lower housing prices doesn't increase unemployment that is not a problem.

However once critical mass is hit the whole neighborhood goes down hill fast and all three effects reinforce each other. About Sept. we will find out whether there are a lot of new Detroits being created.