For the first time since the foreclosure crisis struck Las Vegas five years ago, short sales are on track to eclipse bank-owned, foreclosure sales.
In Las Vegas, 32.6 percent of existing home sales in May were short sales, compared with 26 percent in March, according to the Greater Las Vegas Association of Realtors. Meanwhile, bank-owned (REO) sales accounted for 34.7 percent of all existing home sales in May, down from 36.9 percent in April.
The shift could be attributed to the robo-signing prevention law, Assembly Bill 284, which requires that lenders provide an affidavit of authority to foreclose. Since the law went into effect in October, default notices and trustee sales (auctions) have declined dramatically.
Nationwide, a 25 percent spike in short sales, or homes that sell for less than what the borrower owed on their mortgage, occurred in the first quarter, according to RealtyTrac. In contrast, sales of bank-owned properties declined 15 percent versus the first three months of last year.
“Pre-foreclosure sales hit a three-year high in the first quarter even as the average pre-foreclosure sales price dropped to a record low for our report,” said Brandon Moore, chief executive officer of RealtyTrac. “Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions.”
Third parties purchased a total of 109,521 pre-foreclosure homes during the first quarter, an increase of 16 percent from the previous quarter and an increase of 25 percent from the first quarter of 2011, RealtyTrac data showed.
RealtyTrac data for the first quarter showed a similar trend in Las Vegas foreclosure sales, with pre-foreclosure sales — typically short sales — increased 30 percent from a year ago while sales of bank-owned properties were down 7 percent from a year ago.
The trend suggests a greater likelihood that home prices will continue to fall, as short sales and foreclosure typically sell as sharp discounts.
Readers what do you think? Are more short sales a good thing? Or are more bank-owned REO waiting in the wings?
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