Foreclosures Rise Since August 2013
We went through a period of foreclosures and short sales that bottomed out in August of 2013. Now, CoreLogic is reporting that REO or real estate owned properties are on the rise again. (Note: you can get an explanation of REO and see the local properties of sale at my Daytona Beach REO page.)
Florida is not leading the country this time. We are not even in the top 10, at 12th. Idaho leads the list (who would of thought that?) followed by Maryland and Nevada. REO or bank owned properties are up about 25% in Florida from August of 2013 to March of this year.
The CoreLogic article (link above) goes into some of the reasons for the rise, but I believe the primary reason is that the debt forgiveness act of 2007 was not extended. Homes that would have been offered as a short sale are going into foreclosure because owners are afraid of the income tax they might owe. Since sellers don’t receive any money from a short sale, they see no reason to risk a big tax payment and let the property go back to the bank.
What’s the Affect of Rising Foreclosures on Daytona Beach Real Estate?
It’s important to realize that the increase since August of 2013 puts us nowhere near the levels of early 2011. In January 2011, almost 700,000 homes went into foreclosure in the US. In March of 2014, the number of foreclosures was 430,000.
In the Daytona Beach MLS, 3689 properties are listed for sale as of today. Of those, 637 properties are distressed (Bank Owned, In Foreclosure, Potential Short Sale). So, 17.3% of properties are distressed. This is much lower than the 7000 homes that were on the market in January of 2008. I don’t have the exact numbers for distressed property at the time, but I can tell you that my short sale activity is way down. 2-3 years ago, about 80% of my sales were short sales or REO. Today that number is about 20%.
The affect on Daytona Beach real estate is that price increases will be moderated by more properties on the market. Banks are now pricing close to or at market in many cases, but it depends on location and condition. The best values will generally require repair and remodeling. On the beach, oceanfront and ocean side condos are rising in price and I see that continuing with few new condos being built.
My best advice if you’re interested in distressed properties is to talk to me or David. Please call Lynn at 386-566-7503 or David at 386-566-4169 to discuss you options.