RealtyTrac recently released their Q1 2013 U.S. Foreclosure & Short Sales Report™. One of the more interesting revelations in the report was the decrease in the number of short sales being completed. According to the report, properties not in foreclosure that sold as short sales in the first quarter accounted for an estimated 15% of all residential sales. This is down 10% from the last quarter (4th quarter of 2012) and down 35% from the first quarter of 2012.
Daren Blomquist, vice president at RealtyTrac, was also surprised:
“We expected foreclosure-related sales to be lower given the downward trend in new foreclosure activity nationwide over the past two and a half years, but the decrease in non-foreclosure short sales was a bit of a surprise given the 11 million homeowners nationwide still underwater.”
Certain Markets Still Heavily Impacted
Though the national numbers of short sales are down, there are still some markets that are impacted by this category. Here are the states with the highest percentages of short sales:
- Rhode Island (44%)
- Connecticut (42%)
- Massachusetts (40%)
- Nevada (29%)
- Florida (26%)
- Ohio (24%)
Here are the major markets with the highest percentages of short sales:
- Boston (38%)
- Cleveland (33%)
- Memphis (32%)
- Las Vegas (32%)
- Detroit (30%)
Why the Decrease in Short Sales?
Yet, the overall decrease wasn’t anticipated. Blomquist explains why this may have taken place:
“Rising home prices in many markets are stunting the continued growth of short sales by reducing incentive for both underwater homeowners and lenders. Underwater homeowners may be willing to stick it out a few more months or even years in the hope that they will be able to walk away with money at the closing table and without a hit to their credit rating, and for lenders a failed short sale may no longer translate into bigger losses down the road given that average prices of bank-owned homes are rising — at a faster pace than non-distressed home prices in many markets.”
Short sales will remain a major segment of the real estate market as 15% is still a very significant number. However, the decrease is further evidence that the housing market is recovering.