Southern Nevada has been ground-zero of the foreclosure crisis for a long, long time. Home sales have actually been very strong for months but the majority of the real estate sold has been foreclosures. There has been an influx of investors buying homes for cash and many agents in that arena talk about bidding wars that have occurred. Another common complaint has been a lack of inventory, which makes you wonder if the so-called shadow inventory actually exists. Despite this demand, prices have continued to fall. The hope seems to be that prices will stabilize or even show a modest increase this year.
But what about the traditional retail seller? The cash buyers all seem to want foreclosures and other buyers are seeking a great deal. The traditional seller has faced stiff competition from distressed properties that are perceived as bargains. That may be beginning to change.
For the first time since June of 2008 traditional sales have exceeded foreclosures (article). Bank owned sales accounted for “only” 47% of transactions in January. To be sure, many of the traditional sales were distress sales, such as short-sales. However, it is still a move in the right direction. In an article last year (article) I pointed out that when foreclosures dominate the statistics they aren’t an item to be dismissed, they actually ARE the market and retail sellers have a hard time competing. At that time a whopping 86% of all closings were distress sales with almost all of them being foreclosures.
Nationally the rate of foreclosures has increased by the smallest amount in four years. Perhaps the rate has been slowed by the various programs put in place or banks are being more accommodating on modifications and short-sales. Whatever the reason, the rate has slowed. If the supply of foreclosures continues to fall buyers will eventually turn to homes sold by traditional sellers.
Is It Real?
The latest statistics may only be an aberration and the next round of numbers may show foreclosures dominating again. Statistics can be interpreted in many different ways, but at least it is a hopeful sign. Until the traditional seller at least has some hope of completing a sale the market will not return to normal. The next question is what will the new normal be?
Get your facts first, then you can distort them as you please. – Mark Twain
Photo: Richard Warren