Distressed
homes are quickly being replaced with good ol’ fashioned standard
sales, homeowners with equity.
Distressed Sales: Foreclosures
and short sales combined only account for 4% of the active listing inventory.
Foreclosures and short sales have a much smaller roll in today’s
Orange County housing market. In February 2012 they made up 47% of all
closed sales, 29% were short sales and 18% were foreclosures. Flash
forward to today and they are only 15% of the market, 11% short sales and 4%
foreclosures.
The market has been in transition since the first quarter
of last year. There was a palpable shift away from distressed properties.
Instead, standard sales, regular homeowners with equity in their homes, entered
the mix. They chipped away at the distressed inventories grip on the
market, and properties began to appreciate.
Banks had been in control of the market until the
shift. They sold foreclosures, controlling the pace and price of these
bank owned homes. Short sales, where the homeowner owed more to the bank
than their homes were worth, relied upon the approval of the bank to allow the
sale to even take place. They had to agree to take less than the full
loan amount in order for sales to close. Again, they controlled the pace
and price of these homes. That is no longer the case, as standard sales
have made a very strong comeback.
Do not get me wrong, there are still many homeowners who
have not paid their mortgages in a very long time. Loan modifications,
short sales, and foreclosures will still play a role in the Orange County
housing market for the next two to three years, but they will no longer define housing.
They have gone from the “best actor” to “best supporting actor” in the OC
housing drama.
The data illustrates the evolution in the market.
One year ago, distressed accounted for 19% of the active inventory, 206
foreclosures and 912 short sales. Today they represent only 4% of the
market, 50 foreclosures and 119 short sales. That’s an 85% drop in a
year.
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