Many Metro Areas Show Price Gains As A Result Of Decreased REO And Foreclosure Sales
With the real estate prices heating up in many markets (especially the Bay Area) many people feel content that the appreciation levels for their area continue to rise. However those real estate gains may not be a result of appreciation but rather composition changes according to a recent report by Radar Logic.
The report tracked 25 metropolitan cities in the U.S. and found that prices rose 6.9 percent higher from one year ago. However the report also shows that the increase in prices came about due to the result of a decrease in distressed sales (both REOs and foreclosures) rather than an actual price increase in “non-motivated sales” (traditional sales). For many areas the non-motivated sales marked a much smaller over yearly gain.
The report shows that 25 areas saw a decline in the sales of REOs and foreclosures, and motivated sales represented just 13 percent of all sales in the 25 areas, which marked a 24 percent downturn from a year ago. Additionally, motivated sales showed prices 32 percent lower than non-motivated sales in the 25 metro areas.
Non-Motivated Sales Inch Up 2.7 Percent Nationally But Higher In San Jose
Overall the non–motivated sales inched up just 2.7 percent however their report includes short sales as a non-motivated sale which can significantly lower the price as short sales often sell at a discount.
Although many metro cities experienced a decrease in non-motivated sales San Jose saw a 12.9 percent yearly increase in non-motivated sales, with the overall increase at 14.2 percent. Motivated sales for San Jose decreased from 14 percent to 7 percent.
How long this trend will last may be a telling sign for where the market will head.
Have a great holiday season.