'Real Estate Weekly': Short sales begin to surpass foreclosures
The number of U.S. home short sales surpassed foreclosure deals for the first time since the housing bust began, as banks became more agreeable to selling houses for less than the amount owed on their mortgages, according to a new analysis by Lender Processing Services Inc. Bloomberg reports that data published by the Jacksonville, Fla.-based company show short sales accounted for 23.9% of home purchases in January, the most recent month available, compared with 19.7% for sales of foreclosed homes. A year earlier, 16.3% of transactions were short sales and 24.9% involved foreclosures. "It's a fairly recent phenomenon that short sales have been increasing," says Jonathon Weiner, a vice president in the applied analytics division of Lender Processing Services. "Short sales should be the dominant way of disposing of assets" in distress. Lenders are catching up to short sales after being slow to provide the staffing and incentives necessary to complete the deals, Weiner says. The transactions typically fetch a higher price for banks than sales of homes that have gone through foreclosure. In January, foreclosed homes sold for an average of 29% less than comparable non-distressed properties, compared with a 23% discount for short sales. The gap has narrowed as short sales have become more common. The growing percentage of short sales—which don't require going through the drawn-out foreclosure process—is a sign that the nation is making progress in working through its inventory of distressed properties, Weiner says. Get the rest of this story and the complete Real Estate Weekly e-newsletter here.
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