Foreclosure Sales Increase as Homebuyers Look for Deals

Many Americans are still having trouble obtaining mortgages thanks to high credit standards set and maintained by lenders, but a large number are also now turning to less expensive properties to make their dreams of homeownership come true.

In the third quarter of the year, consumers snatched up 193,059 properties that were in some stage of the foreclosure process or considered bank-owned, up 21 percent from the number seen in the previous three-month period, according to new data from the real estate data firm RealtyTrac. However, despite that increase, the level of foreclosure purchases remained 3 percent below that seen in the same quarter last year.

Nonetheless, foreclosure-related sales also accounted for 19 percent of all residential transactions in the U.S. between July and September, which held steady from last year's ratio, but was down 20 percent from the previous quarter, the report said. On the other hand, sales of homes in the foreclosure process outnumbered those that lapsed into being REO properties, which runs against trends observed during the past few years. In all, there were 98,125 sales of homes in pre-foreclosure, compared to just 94,934 transactions of properties that were REO, or "real estate owned" (another term for lender-owned). That may indicate that in many cases, completed foreclosures are being seen as less attractive options for banks and homeowners alike.

"The shift toward earlier disposition of distressed properties continued in the third quarter as both lenders and at-risk homeowners are realizing that short sales are often a better alternative than foreclosure," said Daren Blomquist, vice president of RealtyTrac.

In all, pre-foreclosure sales climbed 22 percent from the previous quarter and on an annual basis, the report said. Meanwhile, the average price of those transactions declined 3 percent on a quarterly basis and 5 percent year-over-year. At the same time, REO sales rose 19 percent from the period between April and June, but slipped by 20 percent from the third quarter of last year. Prices were down 7 percent from those in both previous timeframes.

Consumers may be more interested in buying homes either approaching or past the point of foreclosure because of the far lower price tag, but also because prices for other, healthier properties have been on the rise in recent months. Experts believe the latter trend could continue through the end of next year at least.

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REAL ESTATE: Foreclosures continue to dominate Inland home sales

Foreclosures continued to dominate Inland Southern California home sales in the third quarter of 2011, with 51.87 percent of homes sold either in the foreclosure process or already foreclosed on and bank owned, according to data released this week by RealtyTrac, an Irvine-based foreclosure monitoring firm.

Because of the strong influence of foreclosures on the rest of the Inland Southern California housing market, the price discount home buyers got for buying foreclosures in the Riverside-San Bernardino-Ontario metropolitan area was less than for other parts of the nation, said RealtyTrac spokesman Daren Blomquist. He said the 18.88 percent average foreclosure discount in Inland Southern California was the 34{+t}{+h} lowest foreclosure discount found in 176 metropolitan areas that RealtyTrac compared in its third quarter report.

According to RealtyTrac 11,950 homes in the foreclosure process or bank-owned were sold in the Inland metropolitan area in the third quarter at an average price of $173,461. That was 2.6 percent fewer homes sold in this distress category than a year earlier.

By contrast, nationally homes in foreclosure or bank owned constituted 20 percent of all sales, which was sharp drop from 30 percent in the third quarter of 2010. The average price was $165,322 and the average foreclosure price discount was about 34 percent. Blomquist attributed the national drop in foreclosure sales to delays stemming from regulatory concerns, particularly in states that, unlike California, initiate foreclosures in the courts.

Because foreclosures need to work through the system before the housing market can heal, “In the long term it will be better that the Inland Empire is disposing of these properties more quickly,” Blomquist said.

Source: http://www.pe.com/business/business-insider-headlines/20120126-real-estate-foreclosures-continue-to-dominate-inland-home-sales.ece