On Thursday, September 16th the Eugene Register Guard published yet another article aimed at causing fear and panic. Please read the article and then come back to read my rebuttal.
http://www.registerguard.com/csp/cms/sites/web/news/sevendays/25297620-35/percent-august-2009-bank-sales.csp
Rebuttal:
Diane needed to do more research and verification for her article. I do not know from where RealtyTrac gets their information, but it is not correct as interpreted. Right now county records show 665 foreclosed properties in Lane County. This includes banks and private parties. A 30 second search in RMLS shows me there are 259 bank owned properties in active or pending status, suggesting 38% of foreclosed properties are listed. This doesn't mean the other 62% are being held. It can take a month or longer to get a house on the market after the sale date. My latest REO listing was very clean and nice and it will still take weeks to get on the market, just due to procedures. Diane's article shows 10% being listed. My guess is RealtyTrac's information includes houses which are currently in default, not yet foreclosed.
What experience did the Broker interviewed have in the REO market? There are agents in the area who have sold hundreds of REO properties and would have been a great resource to ask for more information.
Right now is a GREAT time to buy. Rates will likely be going up in the near future, so over a 30 year term, payments on a home purchased now will be lower and gives the buyer more purchasing power. We need more articles stressing the advantages of buying a home and less articles spreading fear and dread.
This article is just one more example of irresponsible fear based reporting by The Guard and other media sources.
I have sent my comments above to the Register Guard's letter to the editor. I generally get published when I do, so be watching for it.
Saturday, September 18, 2010
Saturday, September 11, 2010
A Distressed Property Study, by ME!
I have a new REO listing in a newer subdivision in Eugene. Part of my due diligence for the asset manager I was researching the neighborhood. What i found was quite disturbing and I thought I would share it with you.
86 Lots in the subdivision
In the last 9 months 8 homes (10%) have sold
Of those 8 homes, 4 (50%) were fair market
Of those 8 homes, 4 (50%) were short sales or REO
Currently there are 4 homes (5%) on the market
Of those 4 homes 3 (75%) are fair market
Of those 4 homes 1 (25%) are distressed.
With the subject and property next door coming on market it will change to:
6 active listings (7.5%)
3 will be fair market (50%)
3 will be distressed (50%)
For the 4 current active listings: average days on market is 117, average price per square foot is $136
For the 8 sold listings: average days on market is 192, average price per
square foot is $128
What this does not count are the homes which are currently delinquent.
Also, it shows that 50% of the homes currently on the market, or sold
in the last 9 months were distressed in some way, which is very high.
Of these 14 listings 2 were/are short sales. Their average price per square foot is $114.
Of the 14 listings 7 were/are fair market transactions. Their average price per square foot is $139
The remaining 5 were/are foreclosures and sold for $123 per square foot.
What I find the most disturbing is the following summary information:
Average price per square foot for FORECLOSURE properties: $123
Average price per square foot for FAIR MARKET properties: $139
Average price per square foot for SHORT SALE properties: $114
If you are wondering what this means, well, let me tell you. It means, as I have been saying, short sales are KILLING property values. The bank would rather (if it makes sense) take the short sale than foreclose because the costs to foreclose are so much higher. In addition, government programs are giving banks rebates (so to speak) for doing short sales. So if the bank can get all or some of the deficiency between the short sale pay off and the full balance, it works better for them.
So where is the problem? The problem is for the people next door to the short sale transaction. Their property value goes down an additional $9 per square foot based on the averages I presented above. For a home with 1,800 square feet, that means $16,200 in lost equity.
86 Lots in the subdivision
In the last 9 months 8 homes (10%) have sold
Of those 8 homes, 4 (50%) were fair market
Of those 8 homes, 4 (50%) were short sales or REO
Currently there are 4 homes (5%) on the market
Of those 4 homes 3 (75%) are fair market
Of those 4 homes 1 (25%) are distressed.
With the subject and property next door coming on market it will change to:
6 active listings (7.5%)
3 will be fair market (50%)
3 will be distressed (50%)
For the 4 current active listings: average days on market is 117, average price per square foot is $136
For the 8 sold listings: average days on market is 192, average price per
square foot is $128
What this does not count are the homes which are currently delinquent.
Also, it shows that 50% of the homes currently on the market, or sold
in the last 9 months were distressed in some way, which is very high.
Of these 14 listings 2 were/are short sales. Their average price per square foot is $114.
Of the 14 listings 7 were/are fair market transactions. Their average price per square foot is $139
The remaining 5 were/are foreclosures and sold for $123 per square foot.
What I find the most disturbing is the following summary information:
Average price per square foot for FORECLOSURE properties: $123
Average price per square foot for FAIR MARKET properties: $139
Average price per square foot for SHORT SALE properties: $114
If you are wondering what this means, well, let me tell you. It means, as I have been saying, short sales are KILLING property values. The bank would rather (if it makes sense) take the short sale than foreclose because the costs to foreclose are so much higher. In addition, government programs are giving banks rebates (so to speak) for doing short sales. So if the bank can get all or some of the deficiency between the short sale pay off and the full balance, it works better for them.
So where is the problem? The problem is for the people next door to the short sale transaction. Their property value goes down an additional $9 per square foot based on the averages I presented above. For a home with 1,800 square feet, that means $16,200 in lost equity.
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