Declining REO Sales May Push Foreclosure Inventory Higher
Jul 31 2012, 9:07AM by Jann SwansonThe pace of foreclosure activity in the U.S. remained unchanged in June with 60,000 completed foreclosures, the same number as in May but 25 percent lower than the June 2011 total of 80,000. The number of pending foreclosures was also unchanged from May at 1.4 million homes or 3.4 percent of all homes with a mortgage and the year-over-year change was a single basis point decrease from 3.5 percent. There were 1.5 million homes in the inventory a year earlier. The foreclosure inventory represents the share of mortgages homes that are in some stage of foreclosure.
These figures were reported on Tuesday by CoreLogic in its National Foreclosure Report for June. The company said that there have now been approximately 3.7 million completed foreclosures since the financial crisis began in September 2008.
“While completed foreclosures and real-estate owned (REO) sales virtually offset each other over the past four months, producing static levels of foreclosure inventory for most of this year, they are beginning to diverge again,” Mark Fleming, chief economist for CoreLogic said. “Over the last two months REO sales declined while completed foreclosures leveled out. So we could see foreclosure inventory rising going forward.”
“The decline in the flow of completed foreclosures to pre-financial crisis levels is more welcome news pointing to an emerging housing market recovery,” according to Anand Nallathambi, CoreLogic’s president and CEO. “However, we believe even more can be done to reduce the inventory of foreclosures by decreasing the level of regulatory uncertainty and expanding alternatives to foreclosure.”
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Proprietary OC Housing News home purchase analysis
$425,000 …….. Asking Price
$635,000 ………. Purchase Price
2/16/2007 ………. Purchase Date
($210,000) ………. Gross Gain (Loss)
($50,800) ………… Commissions and Costs at 8%
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($260,800) ………. Net Gain (Loss)
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-33.1% ………. Gross Percent Change
-41.1% ………. Net Percent Change
-7.2% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$425,000 …….. Asking Price
$14,875 ………… 3.5% Down FHA Financing
3.70% …………. Mortgage Interest Rate
30 ……………… Number of Years
$410,125 …….. Mortgage
$107,982 ………. Income Requirement
$1,888 ………… Monthly Mortgage Payment
$368 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$106 ………… Homeowners Insurance at 0.3%
$427 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,790 ………. Monthly Cash Outlays
($286) ………. Tax Savings
($623) ………. Equity Hidden in Payment
$18 ………….. Lost Income to Down Payment
$126 ………….. Maintenance and Replacement Reserves
============================================
$2,025 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,750 ………… Furnishing and Move In at 1% + $1,500
$5,750 ………… Closing Costs at 1% + $1,500
$4,101 ………… Interest Points
$14,875 ………… Down Payment
============================================
$30,476 ………. Total Cash Costs
$31,000 ………. Emergency Cash Reserves
============================================
$61,476 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Cost of Ownership Analysis
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Nearby Foreclosures
Gain a competitive advantage over other buyers. By locating distressed properties -- before they hit the MLS -- you can discover where tomorrow's REOs and short sales will appear. Most of these properties are not listed on the MLS, but they will be soon. Research properties in advance and get a jump on your competition. Don't miss out on another deal because you couldn't act quickly. Use this tool to your advantage! The red properties are already bank owned. As soon as REO asset managers prepare them for sale, they will be on the MLS. Get ready! The green and blue properties have owners who are not paying their mortgages. They may be offered as short sales, or they may go through foreclosure and become REO. Either way, they will also likely be available on the MLS soon. Find your next home! Be prepared to offer on these properties by researching them in advance or risk losing out to buyers who are have done their homework. Start your research today! To find distressed properties, enter your desired location and press search. Scroll through list by pressing "next."Comparative Market Analysis
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$624,900 616 North ARBOLADO Dr |
0.38 miles 3 bd / 2 ba 1,963 Sq. Ft. |
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$650,000 2948 FIRETHORNE Ave |
0.56 miles 4 bd / 2.5 ba 2,000 Sq. Ft. |
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0.61 miles 3 bd / 2 ba 1,631 Sq. Ft. |
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$355,000 420 SIEVERS Ave |
0.65 miles 3 bd / 2 ba 1,387 Sq. Ft. |
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$529,000 651 BROOKLINE Pl |
0.75 miles 3 bd / 2 ba 1,615 Sq. Ft. |
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$899,900 422 West HERMOSA Dr |
1.15 miles 3 bd / 2.5 ba 1,921 Sq. Ft. |
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$375,000 504 South FONDA St |
1.31 miles 3 bd / 2 ba 1,400 Sq. Ft. |
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$333,000 670 ARCHWOOD Ave |
1.34 miles 3 bd / 2.25 ba 1,302 Sq. Ft. |
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$769,900 510 CATALINA Rd |
1.42 miles 3 bd / 1.75 ba 1,820 Sq. Ft. |
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1.43 miles 4 bd / 2 ba 1,491 Sq. Ft. |
Low inventories are going to cause home sales to continue to fall. We may see record low home sales soon if circumstances don’t change.
NAR: Home Price Increase Has Downsides as Inventory Dwindles
Limited inventory may be boosting home prices, but buyer choices are stifled in an increasing number of markets, the National Association of Realtors (NAR) reported Thursday.
The association’s latest quarterly report showed that the median existing single-family home price increased during Q2 in 110 out of 147 metropolitan statistical areas (MSAs) compared to the same period in 2011. Of the remaining 37 MSAs, 34 posted price declines, and three remained unchanged.
The national median existing single-family home price was $181,500 in Q2, up 7.3 percent from the same time in 2011. This is the strongest year-over-year increase since the first quarter of 2006.
The second quarter’s results illustrated a marked improvement over the first quarter, which showed year-over-year price gains in only 74 MSAs.
Lawrence Yun, chief economist for NAR, said the organization expects prices to continue to rise in the future.
“It’s most encouraging to see a growing number of metro areas with rising median prices, which is improving the equity position of existing homeowners,” Yun said. “Inventory has been trending down, and home builders are still under-producing in relation to growing demand.”
Yun pointed out that price increases can also be attributed partially to a decreasing share of sales in low price ranges, where inventory tightened.
Distressed homes accounted for 26 percent of Q2 sales, down from 33 percent in Q2 2011. Drastic discounts from distressed sales usually work to bring the median home price down.
Since the summer of 2007, inventories have been trending downward steadily. The end of the second quarter saw 2.39 existing homes available for sale, a 24.4 percent drop from the same time in 2011.
NAR president Moe Veissi said that mortgage rates and historically low prices have increased buying power dramatically. The inventory in the lower price ranges needs to keep up with demand, he said.
“What we need now is additional inventory in the lower price ranges, so we hope banks will be releasing more foreclosure inventory into the market. With gains apparent in all of the price measures, banks also should have more confidence in expanding mortgage credit to home buyers using safe but sensible standards,” Veissi said.
The national median family income in the second quarter was $61,000. To purchase a home at the national median price, a buyer making a 5 percent down payment would only need an income of $39,000.
“Because the income required to buy to a typical home is very manageable by historical standards, any further decline in mortgage interest rates will have little effect. Changes in underwriting guidelines would have a far greater impact,” Yun said.
Existing-home sales varied from region to region, rising 1.3 percent in the Midwest and South but slipping 0.6 percent in the Northeast. In the West, tight inventory brought existing-home sales down 5.3 percent as the median home price jumped up 13.4 percent.
“Inventory is pretty tight in all price ranges in most of the West except for the upper end, which accounts for the sharp price gain,” Yun said.