Short sales affect all property owners either directly or indirectly. They are considered a distress sale and sometimes one step closer to a foreclosure. If you have watched the property values, you know that the sale price of a foreclosure brings down the property values in a neighborhood. Short sales typically sell for a higher price than a foreclosure in most neighborhoods. If a property can be sold as a short sale it tends to hold up the values, which is a positive for the neighborhood.
The following is a breakdown of short sale activity in the Tucson MLS (Multiple Listing Service) for January through March 2011 as published in their report released April 8, 2011:
Current Short Sale Active Listings 14.9% of all Active Listings
Short Sales Sold per Month 11% of Sales January-March 2011
As of April 8, 2011, there are currently 1169 Active short sales properties for sale in Tucson with 34 of them at price points of $395,000 and above. So as you can see, it is not just the lower priced homes that are affected by the short sales.
There are currently 758 short sale properties currently under contract waiting for the lender to approve the short sale purchase. Some of the pending short sale contracts will end up back on the market as an active listing. These typically are the contracts where the buyer cannot wait any longer for the lenders approval since this can be a lengthy process.
There are approximately 100 short sale properties closing each month in Tucson. Based on the current inventory levels, that means that it will take 11 months just to sell the short sales listings that are currently active if no additional short sale listings hit the market. CoreLogic reported on March 8, 2011 in a HousingWire report that as many as 50% of homeowners in Arizona are currently upside down on their mortgages and are underwater (they owe more on their loan than the property value). This is up from the 37% that they had reported in August of 2009.
This includes all price points of homes. Approximately 10% of jumbo loans (mortgage amounts over $417,000) are also underwater. We all enjoyed the appreciated property values from 2005-2007 when home prices went up drastically and quickly. Unfortunately, those are the people now that are frequently struggling because the values have dropped so dramatically but the loan amount has not.
The National Association of REALTORS states in January 2011; “Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.”
Short sales are going to be with us until housing prices start to go back up, unemployment goes back down and the economy becomes more stable. If you are in a situation where you are having a hard time keeping your home or need to sell and you owe more on the house than it is worth, it is important to seek advice and guidance from the experts. It is important to talk to a real estate professional who is experienced and successful in completing short sales along with tax, credit and legal advice.
For more information about short sales visit www.longrealty.com/shortsales.