|
|
|
|
| December 1st, 2009 08:15:49 am |
Region: Maricopa County
The Age of the Short Sale
By Mike Orr
The impact of lender-owned homes reached a peak in the winter season 2008-2009. While these were available in large quantities and at falling prices, buyer interest was focused almost entirely on them. Supply was sufficient to keep REO prices declining until early April 2009. After the second quarter of 2009, REOs became much harder to find, and as competition for them grew fierce, short sales have become more important. Given the large number of homes still in distress and the banks’ desire to avoid foreclosure if possible, we expect short sales to become the most important segment in the market over the next few years.
In October 2009, short sales and pre-foreclosures constituted about 39% of the active listings on the Arizona Multiple Listing Service (ARMLS), with normal sales at 48% and lender-owned properties at 13%. Short sales and pre-foreclosures constituted about 50% of the listings under contract on ARMLS, with normal sales at 20% and lender-owned properties at 30%. Lender-owned properties are declining in market share, and normal sales are stable while short sales and pre-foreclosures are increasing.
The demand for short sale properties is now strong, particularly for the more affordable homes. However, a large proportion of the listings are still failing to close in a timely fashion. For example, the monthly sales rate for September was only 1,458 - less than 16% of the listings under contract. However patience is eventually paying off for a lot of buyers since the listing success rate has improved dramatically over last year. The success rate for short sales improved from about 15% in January to over 50% in October, just below that for normal sales, though far less than for lender-owned properties.
The growth in short sales has been most dramatic in the price ranges up to $200,000. The most important range in dollar volume terms is that between $100,000 and $200,000, with a trebling of monthly volume between January and September and a monthly dollar value now over $90,000,000. The price range below $100,000 has also shown dramatic growth although this is of much less significance in total dollars spent. Although the more expensive sectors have relatively low unit sales, when measured in dollar volume, they also show very significant growth in short sales.
When we analyze the 48,000 residential properties in Maricopa County that have received a Notice of Trustee Sale, we find that fewer than 1 in 5 are listed on ARMLS. Given that we are now seeing considerable success among the short sales, it is a little surprising that so few owners attempt a short sale. We anticipate that this percentage will increase over the coming year, as more homeowners understand the benefits compared with foreclosure. We believe that many lenders will postpone a trustee sale if there is any sign of a short sale taking place, so homeowners should not be deterred by the belief that they don’t have enough time within the 90-day notice period.
In Maricopa County, 47% of the short sales and pre-foreclosures listed on ARMLS have not yet received a Notice of Trustee Sale. So a large number of homeowners are clearly attempting a short sale long before they receive a notice, which seems like a sensible strategy. As lenders appear to be getting more flexible in their consideration of what constitutes hardship, it seems likely that more of these short sale listings will achieve success as long as the pricing is not too low to be acceptable to the lender.
Greater Phoenix suffered a very significant price decline between May 2006 and April 2009, so many homeowners who wish to sell their home and have a deed of trust on their property are going to find themselves in a short sale situation for the foreseeable future. Fortunately, lenders are now devoting more effort and resources to short sales, and many REALTORS® are learning the tools and techniques to bring them to a successful conclusion.
As properties get purchased by new buyers at the new lower prices and prices stabilize and then increase, we will eventually see a peak in short sales and a long slow decline in their importance. However, that peak is still ahead of us, and the next several years are likely to be remembered as the “Age of the Short Sale.”
|
|
| November 18th, 2009 03:04:59 pm |
RISMEDIA, November 18, 2009—Aided by the home buyer tax credit, the outlook for housing and the economy appears headed for a sustainable recovery, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the projections are enhanced by a tax credit expansion to more home buyers through the middle of 2010. “Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices,” he said. “In fact, the credit is working better than first projected – it now looks like we’ll have 2.3 to 2.4 million first-time buyers this year.”
The 2009 National Association of Realtors® Profile of Home Buyers and Sellers, shows first-time buyers accounted for a record 47% share of home sales over the past year, up from 41% in the 2008 survey. The share has risen steadily since a cyclical low of 36% in 2006.
Existing-home sales are expected to total 5.01 million in 2009, a gain of 2.0% over last year, and then are forecast to rise 13.6% to 5.69 million in 2010. “A steady draw down of inventory will help home values to turn positive in 2010, but risks such as unemployment remain in the economy,” Yun said.
New-home sales are projected at 397,000 this year, recovering to 549,000 in 2010. Housing starts, including multifamily units, should total 564,000 units this year but grow to 752,000 in 2010.
The 30-year fixed-rate mortgage will probably average 5.3% in the fourth quarter, rising gradually to 5.8% by the end of next year. NAR’s housing affordability index will set a record in 2009, averaging 30 percentage points higher than 2008. Affordability will decline from record highs next year but will remain at historically attractive levels for home buyers.
“We’ve seen a steady downtrend in housing inventory for well over a year and home prices appear to be in the early stages of stabilizing. With the expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3 and 5% in 2010, but with wide geographic differences,” Yun said. He expects growth in the U.S. gross domestic product to be at a pace of 2.5% in the current quarter, with GDP up 2.8% in 2010.
The unemployment rate is close to peaking and is projected to ease to 9.5% by the end of next year.
“The size of the U.S. budget deficit is a concern going forward, and carries the risk of higher inflation. At this point, that risk appears to be restrained,” Yun said. Inflation, as measured by the Consumer Price Index, is seen contracting 0.4% this year, then rising 1.6% in 2010. Inflation-adjusted disposable personal income is estimated to grow 0.4% this year and 1.2% next year. |
|
Blog Archive
December 2009
November 2009
October 2009
August 2009
July 2009
|
|
|
