The number of foreclosure sales is declining, and some markets are experiencing high demand. A recent report shows that the numbers of trade-up buyers is also increasing, something that is due at least in part to rising home equity levels.
The article in RISMedia focuses on a report by FNC, a mortgage technology company and shows that the numbers of foreclosures have fallen so substantially over the past few months that they are nearly down to levels seen before the housing market crisis began. In addition, more buyers are now able to purchase homes, as prices continue to increase. The increase in home prices has led to more home owners being able to trade up to bigger properties. According to the experts, this is an important sign that the recovery is sustainable as it increases housing turnover.
The report by the FNC shows the comparison between the price paid by investors or homebuyers for a foreclosure property compared to its estimated market value is at its lowest level for ten years at just 8.1%compared to 12.5% a year earlier. At the worst point during the crisis, such homes could be sold for up to 25% below estimated market value. In certain areas such as Las Vegas, California and Phoenix, where there is a high investor activity and low foreclosure inventory, prices have been driven up.
The FNC views investing in foreclosure property as being profitable, and the length of ownership for distressed investment properties is also increasing, as is the length of ownership for all home sales. According to the report, the median price for foreclosure properties is $98,000, an increase of 6.8% compared to eighteen months earlier when the housing recovery first began. However the median price for non-foreclosure properties is $205,000, an increase of 21.7% during the past eighteen months. Lower priced foreclosure homes tend to be sold for the largest price discounts, whereas those at the other end of the market tend to be sold for near market value.
Foreclosures rates are declining the most steeply in Arizona, Nevada, Oregon and California, but rates continue to be high in Rhode Island, South Carolina, Tennessee, Alabama, Ohio, Michigan and Illinois.