When looking back on 2011 we can all remember the number 907, 138, a figure which represented the total number of short sales and foreclosed REOs for the year. 2011 marked a glorious year for distressed properties with short sales accounting for nine percent and REOs accounting for 14 percent of homes sales in the US.
These represent national numbers which don’t mean a lot. The digits mean so much more to a particular region. Because of our California roots, let’s take a look at the specific Golden State numbers. Pre-foreclosure sales increased more than 20 percent on a year-over-year basis in several states, including California (23 percent).
Don’t always consider the price when looking at distressed home info, consider that the Days On Market (DOM) remains a key aspect. In general, pre-foreclosure homes that sold in the fourth quarter of 2011 took an average of 308 days to sell after starting the foreclosure process. In comparison, REOs that sold in the fourth quarter took an average of 175 days to sell after completing the foreclosure process.
In many markets (like Los Angeles) short sales outpaced REOs as banks realize the short sale to be a more effective way to recoup some of its losses rather than REOs. We expect short sales to continue that trend in 2012.
For those house hunters looking for a bargain, no need to look beyond your own Bay Area backyard. Among metro areas with at least 500 short sales during the fourth quarter and where short sales increased at least five percent from a year ago, the San Francisco-Oakland-Fremont metro in California posted the biggest short sale discount at 41 percent. That folks, is a blue light special.