Housing Recovery Hopes Dimmed By Rising Foreclosure Numbers

Recent information released by RealtyTrac shows a disturbing turn in the number of foreclosures – actually rising by 9% in May over April. This increase can be partly attributed by the release of a backlog of foreclosures by the banks. However, the majority of those homes in foreclosure are just starting the process.

While a 9% jump seems high, it’s still 4% lower than the number a year ago. On top of that, not all homes that have foreclosure filings will end up back with the bank. According to RealtyTrac’s CEO, “Based on the rise in pre-foreclosure sales we’ve seen so far this year, a higher percentage of these new foreclosure starts will likely end up as short sales or auction sales to third parties rather than bank repossessions going forward.” REOs tend to sell for less than homes in foreclosure. In fact, “a home that is in pre-foreclosure sells for 21 percent less than a non-distressed home, on average. A bank-owned home sells for 33 percent less on average.”

Read the full article here.

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