Trend Watch: We have all heard the reports that overall existing home sales rose steadily over the spring and summer but took its first back-step in August with a small decline. However, the attention getting numbers are seen if you break-down the sales.
Over 30% of sales were from first-time home-buyers using the tax credit incentive. The tax-payer incentive did drive traffic the last few months. But , the 3 month away impending expiration will bring that traffic driver to a halt. There is no other market incentive to buy homes outside of the incentive of low prices.
Distressed sales accounted for over 31% of sales in July and August. This trend will only increase as foreclosures continue to rise through the end of this year and throughout 2010. A survey by “Inside Mortgage Finance” reported that only 36% of home sales were considered “non-distressed”. That means deductively, that 64% were “distressed”. But, they went further to say that of the 36% that were not distressed, all but 5% were optional sales without any forced need. Breaking it down, only one out of every ten sales are “normal” sales.
Over 70% of sales were for property below $250,000.00. We have read reports of inventory being too low to satisfy low-end demand in some markets. Investors are buying foreclosed property that meets the price demands and average rental rate caps at a fast pace while the borrowers with low-income are being pushed to buy the same category of homes.
A sustained recovery is dependent upon stable or rising home prices. Many credit-worthy buyers are waiting for the market to seemingly “bottom” out before buying. With a still volatile market, these buyers are still in a holding pattern.
Foreclosed property sold in single units to standard retail buyers are expected to have sold considerably below market. However, short sale discounts are often greater. Short sale properties are rising in interest among buyers. Unlike bank-owned properties, they generally do not come with the potential bidding difficulties and property condition concerns.
Watch buyer trends to gauge marketing direction and develop exit strategies.
*We welcome your comments and contributions or you can ask our experts any related question.
To Your Short Sale Success!

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