Foreclosures for sale
Mortgage companies owned 600,000 homes nationwide at the end of April, up from 493,000 at the end of January, according to the Wall Street Journal. To sell those properties, companies are cutting prices more deeply and more quickly.
Consider the case of Countrywide Home Loans, the nation's largest mortgage company. The properties offered for sale by the company are tracked and charted on a Web site called the Countrywide Foreclosures Blog. Countrywide currently has 297 properties on the market in Massachusetts, according to the blog. The average asking price is $174,628, well below the state's average sales price. And as the chart at right shows, the average is falling -- in large part because Countrywide keeps cutting the asking price on homes that don't sell.
Companies are much more systematic about selling properties than the typical seller. The company generally seeks the opinion of several real estate professionals to set the initial asking price. Then it reduces that price by a fixed amount if the house fails to sell during a predetermined period. I have heard that in the early days of the downturn, companies would leave the price unchanged for 90 days or more, then cut it by a few percentage points and wait another 90 days. The Journal says some companies now are cutting prices every 20 days.
This glut of discounted properties is weighing most heavily on the markets with the most foreclosures. A new report from Radar Logic finds "motivated sales" -- basically, resales of foreclosed homes or sales at a discount to avoid foreclosure -- comprised about a quarter of the market in Phoenix in March. In Los Angeles, the share was 29 percent. In San Francisco, it was only 9 percent.
I've asked Radar Logic for Boston-area data and I'll update when I get it, but past reports from Movoto, another analytics firm, show such properties accounted for about 6 percent of the homes for sale in Massachusetts at the end of April.
Obviously, in some communities the share -- and the impact -- is much larger.
Interested in buying a foreclosed property? Warren Group offers comprehensive listings for a fee. Trulia shows many listings free.
Enjoyed this post? Get blog updates delivered to your reader. Click here.
Comment
Permalink
Email
Countrywide's website also lists their REO properties... too bad they are all in 'less than desirable' communities. Though I think that will change in another 6 months...
Trulia lists 37 single family homes in some stage of foreclosure in Cambridge, including in prime neighborhoods like West Cambridge and Agassiz. This number is a sharp contrast to the, count 'em, 4 single family homes that sold in the city in April.
Frank S - Are you are predicting an increase in bank-owned properties in desirable communities that the bank cannot sell? Please clarify. Thanks.
Interesting article in the new york times this weekend on how pressures are finally seeping into upper middle class areas.
No surprise, most of the upper middle class has more access to money in order to keep things going longer - but longer may mean 9 months of margin, as opposed to the 1-2 month margin in a poor neighborhood.
Its still math. And prices will continue to drop until the supply overhang is gone. I note the spring market has gone pretty much the way Marcus and I predicted it would months ago.
According to Warren Report numbers by a search of Public Records on the MLS:
Single family home sales for the month of April:
2008: 3
2007: 3
2006: 3
2005: 2
2004: 8
2003: 1
2002: 2
2001: 0
2000: 2
1999: 4
1998: 4
Could it be that Cambridge just doesn't have many single family homes?
Marcus,
Please clarify what you mean by "some stage of foreclosure in Cambridge".
Do you know how many are actually in foreclosure or offered as short sales?
How many of that number are in the "prime neighborhoods".
Massachusetts is unaffordable. Period. End of sentence.
Now with Gas Prices High and going Higher people aren't buying houses in the exurbs and far out suburbs...
Just keep renting... The economy is deteriorating and if job losses happen it will just compound the problem even further.... If we see unempoyment at 1991 levels which were at 9% Foreclosures would send the market in a tail spin . Couple that with higher interest rates (Paulson came out and said he wants a strong dollar policy)... well you see what I am getting at.
I don't think the foreclosure listings on trulia are reliably categorizing properties in foreclosure as single-family homes or condos. If you check "all homes," the site shows a total of 38 properties in foreclosure, and several have unit numbers listed. There doesn't appear to be anyway to distinguish single-family homes from condos without getting more detailed information about the listing, like a full street address that would allow a cross-reference against the Cambridge property database.
unrelated, but gas price in the U.S. isn't that bad compare to other nations. France is $10/Gallon on regular unleaded. Turkey is $11+/Gallon on regular unleaded.
Well, the Citgo nation (Venezuala) is $0.12/Gallon.
wow, how interesting - and incredibly relevant to the topic. well done ni!
Sally, good on you for checking Warren, but the information you seek from Trulia is right there on, well, Trulia.
Certainly Cambridge doesn't have as large a percentage of single family homes as outlying suburbs. But at 65 SFHs for sale, Cambridge's inventory is greater than Arlington's!
Matt - 1991 came and went. We survived. Home values have doubled or tripled since then (thanks to US dollar erosion). News article back then suggested home values would never again go up, due to too much supply and fear of high interest rates. Thus, brining up 1991is not a strong argument to aviod owning a home for the long-term.
And dont listen to what Paulson said about the strong dollar. We all know the US Fed is monetizing debt at record levels (effectively printing). M3 is off the charts. He says strong dollar, then fires up the presses. The US may have some nasty inflation (both price and monetary) that will leave the Fed with no choice but to raise rates. But until GDP numbers and service indexes show economic activity pickup, those interest rates are likely to stay low (that is, the Fed funds rate). But regardless of what the Fed does, mortgage rates are heading up regardless due to low investing in treasuries. Also keep in mind that if the US dollar really does strengthen, that investment in treasuries will pick up and drive down mortgage rates.
howard: at least got your attention :)
Mortgages go off of LIBOR.
Mortgages go off of LIBOR.
Um, no. Some ARMs are pegged to the LIBOR index.
To Middle, RE: #3
See "Mapping foreclosures", in latest blog for evidence of my theory. Pay special attention to the recent, increased subprime originations .
Before you close on your house or give it to the bank. Consider this, you can sell like a realtor without using a realtor. Saving the commission and thus not having such a bad short sale.
Flat fee mls listings are all over google. Dont be on that map ! SELL NOW if you have to !
This blogger might want to review your comment before posting it.
Recent Posts
browse this blog
by categoryINside Boston.com