Sales of Bank-Owned Homes Decline as Market Begins to Stabilize

At the beginning of 2009 roughly 60 percent of closings in California were repossessed homes. Now repossessions represent only about five percent of total sales. Sales of bank-owned homes made up a majority of California home sales during the last four years, but now represent only a small percentage of sales in the state.

So, what do you think California RE agents? Does this decline in REO sales indicate that the market is stabilizing in your area?

In 2013 the median price of a single-family home averages $408,600 in California. If the trend continues the projected price is expected to rise six percent brining the new median to $432,800 in 2014. A modest rate of appreciation can be interpreted as one sign that the state’s housing market is beginning to rebalance itself.

This trend can be attributed to numerous factors in the market place. The most obvious reasons are owners and banks finding alternatives to foreclosure and the impact of the state’s new Homeowners Bill of Rights. The trend includes the Los Angeles and Southern California markets.

The Homeowners Bill of Rights is a package of laws including several provisions to prevent or delay foreclosures, including a ban on dual tracking activities. Dual tracking activities occur when banks work on a homeowner’s loan modification request while simultaneously processing a foreclosure.

These laws resulted in a sharp decrease in foreclosure activity. This year home prices have appreciated rapidly and in August, the California median home price was $441,330. This is 28 percent higher than prices from 2012. This figure also signified the highest price recorded since December 2007.

So, what do you think? Are we heading into a stabilized market?

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  • Jory Blake

    Oh yes, without a doubt! In looking at Southern California, values have risen as high as 35% in some localized neighborhoods. This was a huge help in bringing “under-water ” property into a positive equity position , thus allowing people the ability to “right-size” ,avoid foreclosure or simply relocate.
    By the 3rd quarter of 2015 , the distressed market will be a thing of the past.
    Thank you again for the great articles!
    Jory Blake

  • Rod franco

    Definately! I am now showing more standard sales vs Reo’s, the increase in value is helping home owners sell for equity gain as well as keep their home under certain equity driven alternatives to foreclosure.

  • Lucie

    One has to question the strength of the current rapid increase in home prices. The job market with a 30 hour work week becoming the new norm, the high unemployment and that does not even include graduates unable to find suitable jobs, and the uncertainty of Affordable Health Care and whether it will work without paying out subsidies for 90% of the populace. Too fragile to count on especially since the price increase is growing faster than it took 5 years for bubble to burst. 12% in February 2013 YTD, 20% May 2013 YTD, and now you’re stating 28% YTD in October 2013. Commonsense questions this can continue, given all the factors mentioned above. Those factors are only the national picture. The global picture isn’t even considered in this scenario.