Lenders may be less inclined to approve short sales due to rising home prices, according to a new report by RealtyTrac.
During the first quarter, short sales posted a 35 percent drop compared to year-ago levels.
“The decrease in short sales was a bit of surprise given that 11 million home owners nationwide still owe more on their homes than they’re worth,” says Daren Blomquist, spokesman for RealtyTrac. “Rising home prices are taking away the incentive for short sales on the part of both home owners and lenders.”
Foreclosure prices are on the rise, increasing 28 percent in the first quarter. The banks may be realizing they won’t necessarily lose a lot more money by letting a home go into foreclosure instead, Blomquist says.
However, foreclosure sales have been plummeting too, reaching their lowest levels since early 2008. Foreclosure sales made up 21 percent of the total market during the first quarter, which is down from 25 percent one year ago, according to RealtyTrac.
Foreclosure sales peaked in early 2009, when they made up 45 percent of all homes sold nationally.
Still, foreclosures are making up the biggest bulk of sales in certain states, such as Georgia (where 35 percent of sales were foreclosures in the first quarter), Illinois (32 percent), and California (30 percent), according to RealtyTrac.
Source: “Foreclosure sales fall to lowest level since 2008,” CNNMoney