The foreclosure process in the United States should be speeded up to release much needed properties onto the market which is suffering from a lack of supply, according to real estate data firm RealtyTrack. Its latest research shows that 20% of foreclosed properties are vacant but not being sold to the public which amounts to 167,680 properties nationwide.
These owner vacated foreclosures are in addition to 544,274 bank owned homes that have been foreclosed on but not sold to a third party. There are more than 650,000 homes in the foreclosure process which have not been vacated by the home owner but are likely to end up as short sales, foreclosure auction sales or bank-owned sales in the future, bringing total foreclosure related inventory to nearly 1.4 million.
‘Somewhat ironically, efforts to slow the slide of the housing market in previous years are now hampering a smooth recovery by holding back inventory of homes that almost certainly must sell in the future but are not yet listed for sale,’ said Daren Blomquist, vice president at RealtyTrac. ‘This includes homes in foreclosure that have been vacated by the home owner, which account for one in every five US properties actively in the foreclosure process, as well as more than half a million bank owned homes,’ he added.
He pointed out that efforts to prevent unnecessary foreclosures and mitigate their impact on home values have resulted in a foreclosure process that takes an average of 477 days nationwide, and more than two years in some states and this is holding many of these properties off the market.
Quote from PropertyCommunity.com : “Property values in the United States are still being affected by foreclosure re-sales, high unemployment and negative equity, according to the latest real estate market report from Zillow. The rental market is stronger, however. Median rents rose 2% from February 2011 to February 2012, the February Zillow Real Estate Market Report shows.”
Blomquist said that there should not be concerns that putting these properties up for sale would adversely affect the real estate market. ‘Even if all these homes flooded the market simultaneously they would likely not cause the once feared double dip in prices given supply constraints from non-distressed sellers and stronger demand,’ he said. It was also highlighted that in Florida, Illinois and New Jersey, states with three of the four longest foreclosure timelines, new laws have taken effect in the last six months that speed up the foreclosure process on vacant properties. ‘These laws should help provide some extra supply and possibly help reduce the threat of another housing price bubble forming in these markets,’ he added.
The eventual release of these properties will be welcome, according to Emmett Laffey, chief executive officer of Laffey Fine Homes which covers Long Island and the five boroughs in New York City. ‘Buyer appetite for foreclosed properties is at an all-time high. Investors will continue to swarm at below market deals,’ he said.
Of the total 167,680 vacant foreclosure properties nationwide, Florida documented the most by far of any state, with 55,503 or 33% of the national total followed by Illinois, California, Ohio and New York. States where the percentage of owner vacated foreclosures was above the national average of 20% included Indiana at 32%, Oregon and Nevada both at 28%, and Washington and Georgia at 27%.