For the last two years foreclosures and short sales have typically seen their final sales prices be much lower than their initial asking price. Properties would sit on the market longer and see more price reductions as buyers hadn't yet developed the feverish taste for lender-mediated homes they've now cultivated.
Obviously, things have changed.
With low mortgage rates, the first-time home buyer tax credit and affordable prices in the mix, sales of lender-mediated homes have jumped 131.7 percent in the last year. This increase in buyer demand—combined with a relative lull in new foreclosure activity—has tilted the supply-demand picture dramatically in the lender-mediated segment. Foreclosures are selling quickly, and for much closer to their original asking price.
Some hard data to back up the soft anecdote:
As you can see, lender-mediated homes in the past year have seen their Average Percent of Original List Price Received at Sale increase a whopping 5 percentage points (trust me, that's a lot for this metric) to 94.2 percent. You'll also see that the traditional seller is now receiving slightly less compared to lender-mediated homes—the first time we've ever seen that.
The big shift has taken place just in the last few months. Take a look at the huge upswing in what lender-mediated properties are receiving since March:
Bam.
A major cause of this upswing is likely a new pricing strategy from banks, who are now pricing homes aggressively downward right away at the time of first listing in an attempt to spur action. The huge deluge of home buyers interested in these properties is also helping, obviously. Reports of multiple offers and bidding wars on these properties are far more common today than they've ever been.
With sales expected to remain brisk through the end of November (not coincidentally when the tax credit will expire), this upward trend should only continue.
UPDATE: Chris Snowbeck (aka "The Snowman") from the Pioneer Press wrote an article based upon this blog post that appears today and features some nice commentary from area realtors. Click here to view.
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