Distressed properties—meaning foreclosures, bank-owned (REO) and short sales, where the property is being sold for less than the mortgage due—are undeniably playing a role in keeping our housing values depressed locally. But…how much so, and when will we see the light at the end of the tunnel?
A recent report was released by Campbell/Inside Mortgage Finance showing that distressed sales made up 47% of all home sales in December, 2010—up from November's 44.5% figure. However, the National Association of Realtors reported a lower percentage nationally at 36%. Probably the true number is somewhere in between these two estimates, with one wearing their dark sunglasses and the other wearing their rose-colored goggles when analyzing data—but the more important question is how much of our local market has been affected?
Let's take a look at the statistics for distressed sales in 2010 including single family homes, condos & townhomes:
Figures are taken from local MLS data and system changes didn't take effect until April, 2010, that provided better accuracy for designating a property as a foreclosure or short sale. Information is deemed reliable, but is not guaranteed.
Ocean City: 20%; 175 sales out of the total 868
West Ocean City: 46%; 45 sales out of the total 99
Ocean Pines: 26%; 60 sales out of the total 231
Berlin: 58%; 49 sales out of the total 84
Digging a little deeper into the home sales statistics for Berlin for example, we find that out of the 49 distressed sales, 28 of these sales (or 57% of the total distressed sales in Berlin) were isolated to two communities. If you were to back these out of the equation, that would give the Berlin area a 25% total percentage of distressed sales for 2010. This analysis just goes to show that all “number crunching” needs to be taken with a grain of salt, but the overall distressed property numbers detailed above are significant nonetheless.
What to expect in 2011? Here's some food for thought: the majority of our area foreclosures and short sales have been from second home or investor related properties—properties in which the owner didn’t have as much at stake as the primary homeowners. Once we clear these out of our inventory, we have a chance at stabilizing pricing and inventory—let’s hope that 2011 is that year!
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
