Foreclosed homes sell at 27% discount in U.S. as REO supply increases

July 2, 2010 by · 1 Comment
Filed under: REO News 

Almost a 30% discount is nothing to shake a stick at when purchasing a home from foreclosure.   Prices are still high for where the economy and market is at in 2010.   With unemployment guaranteed to rise higher and the market selling off because of the debt crisis and uncertainty, we should expect more foreclosures in the coming years.

Home prices will continue to fall and will most likely stabilize near the pre-bubble prices of 2002.  Too many jobs have been sent over seas and our industrial section has been reduced to a point where the broad portion of the real estate market is priced too high for most people who would be looking to own a home.  We should look at this continuing correction as a positive move for the future.   The quicker we let the market correct, the faster a durable recovery in the U.S. real estate market will take place.

We must remember that over the life of a 30 year mortgage, you are paying between 2.5-3 times the price of the home through interest charges to the bank.   A dollar saved on price will save you an additional $1-2 dollars in interest over the life of the loan and that last thing we need to do is pay more than we have too for borrowing money.

Bloomberg – Homes in the foreclosure process sold at an average 27 percent discount in the first quarter as almost a third of all U.S. transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.

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U.S. Real Estate Shadow Inventory May Stall Recovery

June 29, 2010 by · Leave a Comment
Filed under: REO News 

Housing Watch – Shadow inventory is real estate to sell that we don’t yet know about. It’s made up of homes that soon will be on the market, but not for the usual reasons.

It includes homes that are usually several months in arrears on their mortgage and about to hit the foreclosure circuit; homes that are 90-plus days delinquent and currently languishing in foreclosure; or bank-owned (REOs) that have not yet been put on the market. But come on the market they will, one way or the other, and at greatly discounted prices – distressed or short sales.

These houses will keep our values flat as long as they exist. How?

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