Distressed Properties Continue to Put Downward Pressure
On Home Prices, Latest HousingPulse Survey Results Show
DC (December 20) – Despite solid demand for home purchases overall, a
glut of distressed properties is continuing to put downward pressure on
home prices, according to the latest Campbell/Inside Mortgage Finance
HousingPulse Tracking Survey.
Distressed properties accounted for a hefty 46.1% of
home purchase transactions in November as reported in the
HousingPulse Distressed Property Index (DPI), using a three-month
rolling average. Significantly, November marked the 23rd
month in a row that the DPI has been above 40%.
same time, however, homebuyer demand for housing appears surprisingly
strong, especially for lower-priced foreclosed properties or real estate
owned (REO). Time on market for move-in ready REO was just 10.1 weeks in
November, the lowest in 15 months, according to HousingPulse.
Time on market for damaged REO was even lower at 9.0 weeks in November,
also the lowest in 15 months.
were the largest segment of the distressed property market during the
month of November, accounting for 17.6% of total home purchase
transactions tracked in the HousingPulse survey. Move-in ready
REO was the next largest group of distressed properties with a 15.2%
share, followed by damaged REO with a 13.3% share of total transactions.
Non-distressed home purchases accounted for the remaining 53.9% of home
purchases in November.
pricing for distressed property was substantially lower than for
non-distressed property. The average short sale sold for $209,200 in
November, while the average move-in ready REO sold for $189,700. Damaged
REO sold for far lower at $98,600. At the same time, non-distressed
properties sold for $258,900.
appraisal system for mortgage originations uses comparative values from
both distressed and non-distressed properties, with appraisers often not
knowing the interior condition of foreclosed homes or the special
circumstances of short sales. Prices agreed-to in purchase and sales
contracts are sometimes not being supported by appraisals for mortgage
financing that use faulty comparative values. These properties then sell
to cash buyers for less, causing declines in average home prices.
estate agents responding to this month’s HousingPulse survey
commented on the appraisal system and how the low prices for distressed
properties impact overall home prices.
foreclosure/short sale markets are making it difficult to get
non-distressed homes to appraise. This is holding off a market comeback
in my area,” reported an agent in Maryland.
could sell the homes for more but the appraisals are an issue since they
are using short sales and foreclosures as comps,” explained an agent in
multiple offers and the short time on the market, one would expect that
prices would be on the increase; however, appraisal guidelines are
holding it back,” complained an agent located in Michigan.
Campbell/Inside Mortgage Finance HousingPulse Tracking Survey
involves approximately 2,500 real estate agents nationwide each month
and provides up-to-date intelligence on home sales and mortgage usage
information on the survey, contact John Campbell of Campbell Surveys at
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