Investors Snap Up Short Sale Homes, Bank Owned Homes

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Real Estate

Investors are snapping up cheap homes, which are typically short sale homes and bank owned homes. As home prices continue to tumble down, investors grab these distressed homes for sale in the near future when the housing sector recovers.

The percentage of short sales and bank owned sales nationwide has increased in January, according to the HousingPulse survey of Campbell/Inside Mortgage Finance. In January, 49.6 percent of all home sales involved distressed sales. This was a continuation of a surging trend, as the share was an increase from 47.2 percent back in December and 44.5 percent in November.

Despite the 17-percent decrease in foreclosure activities in January compared to last year’s foreclosure filings as tracked by RealtyTrac, sales of bank owned homes and short sale homes are expected to increase as owners of distressed homes cut their prices to attract buyers. Since it’s the investors who have the cash, they’re the ones benefitting from the low prices.

Nationwide, it’s expected that the share of distressed sales would increase further in the coming months and dominate home sales. In Florida, the share of sales of bank owned homes and short sale homes has surged to a staggering 63 percent of total home sales in January. The percentages in California and other foreclosure-ridden states are even higher.

In California, the share of distressed sales in January was 66 percent while in Nevada and Arizona, the share was 72 percent of all homes sales. Nevada real estate agents say their housing market is dominated by 65 percent of short sale homes, with bank owned homes taking up 30 percent and non-distressed homes taking up only about five percent. California agents meanwhile say their housing market is primarily a real estate owned and short sale market, with only about 20 percent involving non-distressed homes.

In the 20 major cities tracked by Standard & Poor’s/Case-Shiller, home values dropped by 2.4 percent in December 2010, the biggest year-over-year drop since December 2009. The fourth-quarter drop in 2010 was even bigger as prices decreased by 4.1 percent from the same quarter in 2009. Record inventories of bank owned homes and short sale homes are still pushing down prices.

In Los Angeles, home values dropped by 1.32 percent over the month and by 26.62 percent compared to three years earlier. In Miami, the home price index dropped by 0.49 percent over the month and fell by 38. 24 percent compared to three years earlier. Home values in Tampa dropped by 2.57 percent over the month and fell by 34.93 percent compared to three years earlier.

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