Damaged foreclosures beckon bargain-hunters
Prices for REO properties in need of repair - the type banks look to unload after a foreclosure - have not been rising along with prices for non-distressed properties. They have been moving in the opposite direction.
According to HousingPulse results, the average price for a damaged REO property sold in January was just $88,100. That was not only 17.1 percent below the average damaged REO price recorded a year ago - $106,300 - but also the lowest level ever recorded by HousingPulse in its four-year history.
One reason for the decline in damaged REO prices is the fact that owner occupant buyers have become less interested in foreclosure fixer-uppers over the better part of a year. HousingPulse results for January show current homeowners had a record low 15.0 percent share of the damaged REO purchase market, while first-time homebuyers had a near-record low share of 19.6 percent.
Meanwhile, investors, lured by low prices and the growing opportunities for flipping, have significantly increased the purchase share of damaged REO properties in recent months. During January, investors accounted for 65.4 percent of damaged REO home purchases, according to HousingPulse numbers. That was up from 58.1 percent a year earlier and the highest level recorded in the survey’s four-year history.
Strong homebuyer traffic and limited housing inventory continued to push overall home prices upward in January. HousingPulse data show that home prices overall, based on a three-month moving average, are at the highest level - $236,100 - seen in nearly three years and have been climbing since last spring. Prices for non-distressed properties accounted for 65.0 percent of total home purchase transactions tracked by HousingPulse in January. Average home prices for non-distressed properties were up a healthy 5.1 percent on a year-over-year basis - rising from $264,700 in January of 2012 to $278,200 in January of 2013.
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