- CAR releases a report on distressed properties.
- Short sales and REOs small part of market.
- Distressed homes jump in value.
Realtor Anthony Rael, from time to time, still gets calls from consumers who want to buy bargain-priced, distressed properties.
That is so 2010.
“It’s funny that a lot of buyers haven’t got the message that foreclosures and short sales are far and few between,” said Rael, a broker with RE/MAX Alliance.
They also aren’t the bargains they were two and three years ago, often rising in value faster than the overall market.
During the Great Recession, distressed properties such as REOs (Real Estate Owned properties that lenders acquired following foreclosures) and short sales, in which the lender agreed to accept a sales price less than the loan amount, could be found from low-income neighborhoods to McMansions on suburban cul de sacs.
While they accounted for perhaps one out of every five sales at the nadir of the housing downturn, their impact was even greater than that because the competed with and drove down the values of homes that weren’t in danger of being returned to the lender.
“They hurt entire neighborhoods,” said Rael, a spokesman for the Colorado Association of Realtors.
Last week, CAR released a study that found in the fourth quarter distressed properties are quickly becoming a thing of the past in the Denver area and throughout the state.
And the few out there, are rising in value.
In the Denver area, there were only 638 REO sales in the fourth quarter, a 67.8 percent drop from the 1,613 in the fourth quarter of 2012.
The median price, however, rose 12.1 percent to $168,000 from $149,900, trouncing the 1.9 percent year-over-year increase in the median price for market-rate properties in the fourth quarter.
The number of shorts sales dropped even more.
Short sales fell by 64.5 percent, with 333 trading hands, down from 937 a year earlier. The median sales price, meanwhile, rose 9.3 percent to $180,000 from $164,650.
Lender-mediated properties (foreclosures, short sales, REO or other distressed property sales) represented 8.2 percent of all sales during the quarter.
Statewide, distressed properties showed a similar trend.
The number of REO and short sales, respectively, fell by 50.5 percent and 58.5 percent, accounting for 8.6 percent of the total market.
The statewide median sales price of a REO rose 3.7 percent to $148,675, while the average price rose 5.9 percent to $174,686.
“Prices are going up because there is a lot of demand for them, while the available inventory is really low,” Rael said.
“It is supply and demand.”
Another difference between today and during the downturn, is that most of the prospective buyers are owner-occupants, and not investors who are looking for a quick fix and flip.
“While you will always find exceptions, especially for a house in really bad condition that needs a lot of work, there is no way a flipper or an investor is going to pay market-rate prices for a foreclosure,” Rael said.
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.