Many Americans are still having trouble obtaining mortgages thanks to high credit standards set and maintained by lenders, but a large number is also now turning to less expensive properties to make their dreams of homeownership come true.
In the third quarter of the year, consumers snatched up 193,059 properties that were in some stage of the foreclosure process or considered bank-owned, up 21 percent from the number seen in the previous three-month period, according to new data from the real estate data firm RealtyTrac. However, despite that increase, the level of foreclosure purchases remained 3 percent below that seen in the same quarter last year.
Nonetheless, foreclosure-related sales also accounted for 19 percent of all residential transactions in the U.S. between July and September, which held steady from last year’s ratio, but was down 20 percent from the previous quarter, the report said. On the other hand, sale of homes in the foreclosure process outnumbered those that lapsed into being REO properties, which runs against trends observed during the past few years. In all, there were 98,125 sales of homes in pre-foreclosure, compared to just 94,934 REO transactions. That may indicate that in many cases, completed foreclosures are being seen as less attractive options for banks and homeowners alike.
“The shift toward earlier disposition of distressed properties continued in the third quarter as both lenders and at-risk homeowners are realizing that short sales are often a better alternative than foreclosure,” said Daren Blomquist, vice president of RealtyTrac.
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In all, pre-foreclosure sales climbed 22 percent from the previous quarter and on an annual basis, the report said. Meanwhile, the average price of those transactions declined 3 percent on a quarterly basis and 5 percent year-over-year. At the same time, REO sales rose 19 percent from the period between April and June, but slipped 20 percent from the third quarter of last year. Prices were down 7 percent from those in both previous timeframes.
Consumers may be more interested in buying homes either approaching or past the point of foreclosure because of the far lower price tag, but also because prices for other, healthier properties have been on the rise in recent months. Experts believe the latter trend could continue through the end of next year at least.
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Image: taberandrew, via Flickr