Foreclosure Discount Shrinks | Short Sale vs. Foreclosure | Riverside Home Prices | Riverside Real Estate Agents | Riverside Short Sale Agents

Low inventory wipes out foreclosure discount

With the number of homes available for sale at an all-time low, the price difference between standard “equity” sales and bank foreclosures has all but dried up.

Real estate evaluation service Zillow said this week that the average discount nationwide for foreclosure properties had decreased to just 7.7 percent. In the Inland Empire, where the market is sizzling, the discount is less than 2 percent.

“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” Zillow Chief Economist Stan Humphries said in a release. “Additionally, in areas such as Phoenix and Las Vegas, where not long ago one out of every two homes sold was a foreclosure re-sale, buying a foreclosure is no longer just for investors.”

According to Zillow, the smallest foreclosure discounts were estimated in Las Vegas (0%), Phoenix (0%), Sacramento (0.7%), Riverside (1.8%), San Diego (2.4%), Miami-Ft. Lauderdale (2.9%), Los Angeles (4.2%) and San Francisco (4.7%).

The largest discounts remain in Pittsburgh, PA (27.8%), Cleveland (25.8%), Cincinnati (20.2%), Baltimore (20%), New York City (15.5%), Detroit (15.2%), Charlotte, NC (15.1%), Boston (15.1%), Philadelphia (14.4%) and Minneapolis-St. Paul (13.9%).

INVENTORY DOWN 64%

Lack of housing inventory is driving the demand and increasing prices.

According to figures from the California Regional Multiple Listing Service, there were 6,272 homes on the market at the end of October in the 51 Inland Empire communities covered by the Inland Valleys Association of Realtors. Based on demand, that represents just a one-month supply. In October 2011, there were 17,470 homes on the market, a 3.2-month supply.

The average sales price across all those communities was $246,509, an 11.14 percent increase from October 2011. But prices have increased 15.6 percent since January of this year, when the average sales price was $213,197.

Economists and market pundits differ on the immediate future. During last week’s National Association of Realtors annual conference and expo, NAR Chief Economist Lawrence Yun predicted a 5.1 percent increase in median home prices for 2013.

Mark Vitner, senior economist with Wells Fargo, compared distressed homes to an “after-Christmas sale,” in which “most of the best stuff has been picked over, but make no mistake – they’ll be with us for awhile.”

Others argue that we are seeing a “false floor” in prices, propped up by a lack of available homes and a hungry throng of buyers hoping to snap up homes while interest rates are low.

‘FRAGILE’ MARKET

The housing market recovery is “fragile,” Yun said, and could tip either way depending on what happens to the credit market and the impending “fiscal cliff” – the label given to Dec. 31, 2012, when temporary payroll tax cuts, business tax cuts and consumer income tax cuts are scheduled to end, and new taxes related to President Obama’s health care law begin.

The laws of basic economics have contributed to increasing home prices, and they will continue to influence the market. Rising interest rates, inventory spikes, or a drop in consumer demand because of tax hikes could halt the housing recovery.

Is today the day to put your home on the market in your neighborhood? Call us today at 951-778-9700 and we’ll crunch the numbers for you.

(Brian Bean and Timothy Hardin are Default Advocates and owners of Dream Big Real Estate. They can be reached directly at Brian@DreamBigRealEstate.com or 951-778-9700.)

Brian Bean and Timothy Hardin Licensed Default Advocates DRE Lic #01889132 Info@DreamBigRealEstate.com

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Foreclosure Discount Shrinks | Short Sale vs. Foreclosure | Riverside Home Prices | Riverside Real Estate Agents | Riverside Short Sale Agents

Labels: Foreclosure, Riverside Home Prices, short sale agents, Short Sale in Riverside

# posted by Scott Chappell and Brian Bean @ 3:20 PM