Tuesday, August 08, 2006

Defaults Sell Faster Than Existing Homes

Inman News has this report. "The number of new residential foreclosures hit its highest level of the year in July, while the active foreclosure inventory for the month actually dropped 3.1 percent from the June level, according to Foreclosure.com. 'The decline in active foreclosures can be attributed to many of these properties being purchased,' the company announced."

"There were 28,130 new residential foreclosures in July, a 4.95 percent increase over June and a 10 percent increase from July 2005. Michigan, Colorado and Ohio were among the states hardest hit by new foreclosures."

"The largest monthly increases in new foreclosure rates among states with more than 300 new foreclosures were recorded in Alabama (up 21.3 percent); Colorado (up 12.9 percent); Illinois (up 11.6 percent); Michigan (up 38 percent); Minnesota (up 31.1 percent); Missouri (up 48.2 percent); and Ohio (up 14.3 percent)."

"'New residential foreclosures across the nation are up this year, driven in large part by increases in adjustable-rate mortgages,' said Brad Geisen, CEO. Geisen also stated that about 35 percent of all available foreclosed homes were purchased in July, a 5 percent increase over the first half of 2006 and twice the rate of existing-home sales nationwide."

"'Cleary, investors are becoming savvier when it comes to buying homes in foreclosure,' he said."


At 8:20 AM, Blogger Loren said...

Here's one example. Folks in my neighborhood paid $208k for a house in 2002. This spring it was listed for $217. Two months later they move out and a new realtor lists it at $179k but this time it's the bank selling the house. Meanwhile a smaller house one block over sits on the market all summer long at $205k, then $200k, then $195k, then $185k (paid $180k also in 2002). The bank actually made enough of a price cut to move the house, the other owner just makes little cuts, but he did eventually sell the house.

The biggest difference I can see is that an owner is worried about protecting their down payment, the bank doesn't care about the prior owner's down payment and cuts the price sooner and faster.

At 1:06 PM, Blogger dimitris said...

the bank doesn't care about the prior owner's down payment and cuts the price sooner and faster

This all depends on the bank, I know countrywide is not giving homes away unless foreclosures really pile up and then they have to. Banks are still selling at market value and not a penny less as they are in no panic to sell, yet.


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