Crisis In The Housing Market
Foreclosures A Third Of Sales; Mortgage Rates Rise
Foreclosures made up roughly one-third of all home sales this spring. While that's a smaller share of sales from the previous quarter, it's six times the percentage of foreclosures in a healthy housing market. Meanwhile, fixed mortgage rates edged up this week from their lowest levels in decades.
Foreclosure sales, which include homes purchased after they received a notice of default or that were repossessed by lenders, accounted for 31 percent of the market in the April-June quarter, foreclosure listing firm RealtyTrac Inc. said Thursday.
"Over 60 percent of homebuyers are looking for a property that's in foreclosure and so the buyers really know that there are bargains out there to be had," said Rick Charga, senior vice president.
The more sales, the better, he said. "We need the percentages of sales to be high, we need the number of these properties sold to be high, so that we can get these properties out of inventory and let the housing market prices start to climb back up," Charga said.
Foreclosures' share of the market would likely have been larger this spring if not for a state and federal investigation into faulty paperwork by banks and servicers. The probe has led many banks to delay foreclosure sales. Once that is complete, foreclosures will likely surge later this year.
As a slice of all home purchases, foreclosure sales peaked two years ago at 37.4 percent. In the second quarter, they declined from 36 percent in the January-March period.
Mortgage Rates Climb To 4.22 Percent
The average rate on the 30-year fixed mortgage rose to 4.22 percent, Freddie Mac said Thursday. That's up from 4.15 percent last week, the lowest level on records dating to 1971.
The average rate on the 15-year fixed mortgage, a popular refinancing option, rose to 3.44 percent. Last week it fell to 3.36 percent,
Still, low rates have not been enough to revive the weak housing market. Mortgage applications to purchase a home fell last week to a 15-year low, according to the Mortgage Bankers Association.
In all, 265,087 homes in some stage of foreclosure or owned by banks were sold in the second quarter, down 11 percent from the same period a year ago. Sales of all other types of homes also declined, according to RealtyTrac's figures, which differ from other home-sales estimates.
Bank-owned homes, which are sold after being repossessed, accounted for nearly 19 percent of all sales. That's unchanged from the previous quarter.
Distressed properties, often in need of repair, typically sell at big discounts and weaken prices for neighboring homes.
A bank-owned home this spring sold for 40 less than the average price of other homes, according to RealtyTrac. That's up from 36 percent in the previous quarter and 34 percent from the same quarter one year ago.
Foreclosed Home Prices Dip
Sales of homes in the foreclosure process or short sales went for 21 percent less than the average home sold, the firm said. That's up from an average of 17 percent in the first quarter and 14 percent in the second quarter of 2010. A short sale is when the lender agrees to accept less than what is owed on the mortgage.
The average sales price of a foreclosure property was $164,217, down less than 1 percent from the January-March quarter and nearly 5 percent from the April-June quarter in 2010, the firm said.
Nevada led all states with foreclosure sales, accounting for 65 percent of all home sales, RealtyTrac said.
In Arizona, foreclosure sales represented 57 percent of all home sales for the quarter, up 16 percent from a year ago. In California, foreclosure sales accounted for 51 percent of all home sales in the second quarter, virtually unchanged from last year.
Several other states had foreclosure sales that accounted for at least one third of all home sales in the first quarter: Michigan, Colorado, Florida, Illinois and Oregon.
This report contains material from the Associated Press.