An interesting aside on the existing home sales numbers today from the National Association of Realtors: Sales appear to be hovering just below the five million annualized rate, with little bumps up and down and sales bounce around the bottom.
Prices are putting buyers back in the game in some of the most distressed markets, especially out West. Prices in the West have fallen 16 percent year over year, while the national rate is more like right around 6% in May from May of 2007.
I asked the Realtors how much of these sales are “distressed” properties, that is, short sales (where the seller works with the lender to sell at a price below the mortgage value--that way the seller and the lender avoid foreclosure, which usually ends in bigger losses) and REO sales which are bank-owned properties (homes that have already gone through foreclosure).
According to the Realtors, a full one third of sales are distressed properties. Think about that. Five million home sales expected this year and of those about 1.65 million will be homes that a seller couldn’t afford to keep.
And these numbers are only for May, not even half the year yet. Given the increase in foreclosures, I wonder at the end of the year how much of all existing home sales will be distressed properties.