Though the present real estate market may look fairly abysmal, there are still some great deals out there for buyers. On average foreclosed properties sold for 34% less, with short sales averaging around 15% less. While these are national trends, they still demonstrate how much houses are discounted once they have been foreclosed upon. While many of these properties are discounted because they are in bad shape, it is still possible to find heavily discounted homes that are in great condition. There is no shortage of supply either, in Lane County 30% of all sales were foreclosures, and national foreclosure rates have jumped 2,500% in the past four years.
According to a new study, foreclosure and short sale’s remain high in Lane County. Nearly a third of all recent home sales in Lane County were either short sales or foreclosures. The majority of these foreclosures are occurring because of loss of income, which has equally affected both the rich and poor. Because houses that are foreclosed upon or short sold sell for about 15% less than other houses, the entire market has become depressed. The situation here is similar to that of the rest of the nation, as a whole, with around 31% of sales in the US being foreclosed or short sold.
The foreclosure numbers are out for May, and it appears that more and more banks are seizing homes. Nationwide, lenders took back 93,777 properties, while foreclosure filings fell by 3% since April. Oddly enough, this recent wave of seized houses actually has to do with the market becoming more stable. Lenders have been fairly lax in repossessing homes for the past few months while they tried to keep up with the vast number of people who were forced to default when the housing bubble burst. Because of the recent stabilization of the market, lenders are starting to catch back up and repossess assets again. Oregon’s foreclosure rate is currently one of the worse in the nation, ranked as having the 16th most foreclosures in the nation.
Due to the rush of foreclosures lately many are wondering what their options are for buying a home after foreclosure. While foreclosure is damaging to your credit, the reasons behind your foreclosure may affect how quickly you can buy your next home. Lenders look at things other than credit score when considering you for a home loan, and if they fail to see why you were foreclosed upon, they might assume you are what is known as a “walk away.”
“Walk aways” are what the loan industry calls those who have purposefully defaulted on their mortgage when they could still afford to pay it. This is done typically because the amount owed on a home is greater than the price; many believe they can simply walk away from the mortgage, allow the bank to reposes the house, build up their credit again and buy a new home. Be wary, though, as if lenders suspect that you have done this they will be hesitant to allow you to borrow. What is typically a 2 to 5 year waiting period for buying a new home could be increased to 7 years or more.
In case you havent been watching the real estate market lately, foreclosures have far from gone away. In fact, according to a recent report the number of foreclosures in Eugene Springfield jumped half a percentage point, to 1.6 percent in April. This trend is reflected nationally, with the number of homes owned by banks in March being estimated at around 522,000, and recent projections indicating that the number is on the rise. So, what are the alternatives to foreclosure?
Loan modification, deed in lieu, and short sales are the practical alternatives. Short sales occur when you owe more money than the house is worth. One advantage to a short sale is less damage to your credit than a foreclosure. You’ll need a realtor to help with a short sale, but the commission is included as part of the sale; in other words it doesnt cost you anything.
Of course, if you’re a buyer, foreclosures and short sales arent such bad news; these are some of the best deals around. The house shown below was one of my listings. It was clean and a great deal, listed at $149,000. Affordable housing in Eugene is still around.
1 in 5 homes in the US recently sold were foreclosed and bank owned, according to CNN. I looked at recent sales in the Eugene Springfield area, and we are faring better. In the last month, about 1 in 10 sales of houses were bank owned (11%), and about 1 in 10 (9%) were short sales. Why? Perhaps because our market didn’t rise or tank to such extremes as others in the country.
So what caused our housing meltdown, which started in 2007? The short answer is policies from Washington, D.C. As a realtor, I occasionally get heat from people saying that I and my fellow realtors are responsible. Other mistaken villains are builders and bankers. Wall Street’s culpability is somewhat less clear.
Two excellent editorials pin the start of the problem on the 1992 GSE Act, which led to the issuance of more sub-prime loans, which as we all saw, default more. The goal of the act was a greater proportion of home ownership; that may or may not be achieved given the high rate of foreclosures.
So, what’s the eventual outcome? Housing will recover as will the economy. It’s just a question of when.
I recently represented buyers in the purchase of this foreclosed home. We got it for 81K, and from showing to closing it was under a month. If you’re interested in foreclosures in Eugene Springfield, give me a call at 517-6543.
The WSJ reported today that if you’re a tenant living in a house that’s mortgage is foreclosed upon, you might be able to stay. It’ll all depend on who ended up with the property. Beginning January 9, 2009 Fannie Mae will allow tenants to sign leases for foreclosed upon houses in which they live. While this is a good idea, it affects a small number of people nationwide, perhaps 4,000.
Other owners of foreclosed upon houses, such as publicly traded banks, may indeed vacate the premise to aide in selling it. Rising tides raise all ships, and an improved national economy should decrease the foreclosure rate, which is at record highs of some 1 in 20 mortgages. So, things will probably get worse before they get better.