In its May foreclosure newsletter, RealtyTrac named the top 10 places to buy foreclosures in 2012. The selected locations were out of the 100 largest metropolitan statistical areas based on population. The list was further narrowed according to markets with at least 200 foreclosure-related sales transactions in January 2012. Then, it was whittled down again to only include metros with foreclosure sales prices at least 30 percent below the average price of a non-foreclosure property.
The number one metro to buy a foreclosure in 2012 is Kansas City, Missouri, where the average foreclosure sales price is $73,257 compared to $101,710 a year ago. The average discount for foreclosures is 51 percent. Overall, foreclosures make up 29 percent of all sales in this metro. Citing data from the Kansas City Regional Association of Realtors, the newsletter stated home sales in Kansas City rose 14 percent in March from a year ago, and prices increased 3 percent from a year ago.
Boston earned the number two spot with an average foreclosure sales price of $195,672 compared to $203,606. The average discount is 49 percent, and 18 percent of sales are foreclosures. Boston also had the lowest unemployment rate on the list at 5.9 percent.
Pittsburgh came in at number three. The average foreclosure sales price is $73,142; last year, it was $82,928. The average discount is 48 percent.
At fourth place, Tulsa has an average foreclosure sales price of $86,725 compared to $113,969 last year and also has an average discount of 38 percent.
San Francisco earned the number five spot. A pricey city to own a home, San Francisco foreclosures averaged $307,803, down from last year’s average of $317,409. Discounts for foreclosures are about 38 percent. Out of all sales, 47 percent were foreclosures in San Francisco, the highest out of all 10 cities. Real estate blog Movoto estimated Facebook’s initial public offering will add $1 billion to property values in the Bay Area.
Cape Coral-Fort Meyers, Florida is sixth best place to buy a foreclosure, and averaged at $102,022, with last year’s sales prices at $93,976. Discounts were also 38 percent.
Charlotte ranked number seven and averaged $118,808 for foreclosed homes. Last year, the average was $144,614, also with a 38 percent discount.
Tucson, Arizona was number eight at $112,660 compared to $129,500 last year. The average discount was also 35 percent. According to the Tucson Association of Realtors, sales rose 16 percent in February from a year ago. Also, the average sales price increased 4.75 percent from January to February, according to RealtyTrac.
Seattle foreclosures averaged $212,565, a drop from the year ago price of $237,852. At number nine on the list, the metro had an average discount of 35 percent.
The number 10 spot went to Columbus, Ohio, where the average sales price is $98,223, falling from $101,152 last year. Average discounts were 32 percent.
The newsletter was authored by RealtyTrac staff writer Octavio Nuiry.
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It will take 46 months to clear the market’s supply of distressed homes, or the shadow inventory, according to estimates fromStandard & Poor’s Rating Services based on first-quarter 2012 data.
While national residential mortgage liquidation rates appeared stable over the first three months of this year, these rates varied widely between local markets, which prevented any significant reduction in S&P’s months-to-clear estimate, the agency explained in its report.
Regional variations in how quickly servicers can clear the backlog of nonperforming loans are primarily due to differences in foreclosure procedures, judicial vs. non-judicial.
As of first-quarter 2012, S&P says its months-to-clear estimate in judicial states was almost 2.5x as long as non-judicial states.
S&P includes in the shadow inventory all outstanding properties on which the mortgage payments are 90 or more days delinquent, properties in foreclosure, and properties that areREO. The agency also includes 70 percent of the loans that became current, or “cured,” from 90-day delinquency within the past 12 months because S&P says these loans are more likely to re-default.
S&P’s calculation of the months to clear the shadow inventory is the ratio of the total volume of distressed loans to the six-month moving average of liquidations. Although S&P’s analysis of the shadow inventory uses only non-agency loan data, the agency’s analysts believe the months-to-clear is similarly high for the market as a whole.
The volume of these distressed U.S. non-agency residential mortgages—which excludes loans from government sponsored entities, such as Fannie Mae and Freddie Mac—remained extremely high at $354 billion in the first quarter, according to S&P. The agency does note, however, that the industry’s distress volume has declined in each quarter since mid-2010.
To put the shadows into perspective, S&P says this latest number, which is based on the original balances of the loans, represents slightly less than one-third of the outstanding non-agency residential mortgage-backed securities (RMBS) market in the United States.
The New York City metropolitan statistical area (MSA) has the highest months-to-clear in the nation, at 202 months.
S&P also reported that the U.S. monthly first default rate fell to 0.67 percent in March 2012, the lowest level since May 2007. The first default rate is the percentage of loans that became 90-plus-days delinquent in that month for the first time, as a percent of all loans that have never before been at least 90 days or more past due.
This means that properties are entering the shadow inventory at a slower rate. S&P says with this improvement, the speed at which servicers can liquidate or cure nonperforming loans will determine the size of the shadow inventory going forward.
Default rates have been falling since first-quarter 2009 and the average national liquidation rate has stabilized, according to S&P—both factors that bode well for getting a handle on the magnitude of the industry’s shadow inventory and its inevitable impact.
House flippers and other real estate investors in California are seeing their window of opportunity closing, and new statistics published byDataQuick show they must act fast.
DataQuick’s statistics show that the median price of all houses and condos sold in California in November was $291,000, up 19.3 percent from November 2011. Additionally, the number of homes sold jumped almost 15 percent to 37,481. As you can see, the housing market is warming up. (more…)