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.

A total of 232,959 homes sold in the period had received a default or auction notice or were seized by banks, RealtyTrac said in a report today. That’s down 14 percent from the fourth quarter and 33 percent from the peak a year earlier, the company said. The average price of a distressed property was $171,971, according to the Irvine, California-based data seller.

“The discount will probably stay between 25 percent and 30 percent as lenders carefully manage the number of new foreclosure actions in order to avoid flooding the market,” Rick Sharga, RealtyTrac’s senior vice president for marketing, said in an interview.

“We’re clearly creating more properties that will be sold at distressed prices than the market is absorbing,” Sharga said. There were more than 250,000 new bank seizures in the first quarter.

Source

Comments

One Response to “Foreclosed homes sell at 27% discount in U.S. as REO supply increases”
  1. keith collins says:

    I think all of the banks with homes, should be going out of theur way provide the general puplic an opportunity to buy REO homes.

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