Homebuyers in search of great foreclosure deals may have to work a little harder to find bargains these days.
Due to a "shortage" of foreclosed homes for sale and increased demand from buyers, bank-owned properties have been selling for higher prices, says Daren Blomquist, vice president of foreclosure listing firm RealtyTrac.
Foreclosure sales decreased 12 percent in the second quarter, compared to the first three months of the year, according to a RealtyTrac report released today.
"The second-quarter sales numbers provide solid statistical evidence of what we’ve been hearing anecdotally from real estate agents, buyers and investors over the past few months: There is a limited supply of available foreclosure inventory to choose from in many markets," Blomquist says.
Bank-owned homes and those in some stage of foreclosure sold for an average of $170,040 in the second quarter, the report shows. That's up 6 percent from the first quarter and up 7 percent compared to the same period last year. It's the biggest annual increase in foreclosed home prices since 2006.
Is there really a shortage of foreclosures?
The notion that there is a "shortage" of foreclosures on the market may sound ironic to those who live in neighborhoods plagued by vacant homes and foreclosures.
But remember that not all foreclosures are for sale -- at least not at the same time.
Take Fannie Mae as an example. As of the end of June, Fannie Mae owned 109,266 foreclosed homes. Only 23 percent of those were available for sale then, according to Fannie's latest quarterly report. Nearly half of the foreclosed homes were on hold in Fannie's "unable to market" list, which includes properties that are being repaired, rented or occupied by the homeowner. And many were on hold for "other" reasons.
It's not a secret that Fannie, Freddie and other owners of foreclosed homes have the power to control the volume of foreclosed homes for sale.
If all foreclosed homes were available for sale at the same time, you wouldn’t hear about shortages of inventory and rising prices. But step into Fannie's shoes for a second. If you were the owner of all those foreclosed homes, would you want to sell all properties at once? Probably not.
So when you hear about a shortage of foreclosures, don't think the foreclosure crisis is over. It's not. There were more than 1 million homes in some stage of foreclosure in the first half of this year, RealtyTrac says. If lenders complete the foreclosure on those homes, they will have to be sold at some point.
For those of you looking to buy a foreclosed home, here are some tips on how to get the best deal.
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