If you are trying to sell a house, this chart might make it hard for you to sleep tonight. It shows what you’re up against. The figures come from a Nov. 1-8 nationwide survey of real estate agents conducted by Campbell Communications and sponsored by the publication Inside Mortgage Finance. More than 2,500 agents participated.
As you can see, 29% of all sales in September and October were REO—real estate owned. That means the previous owners lost the houses in foreclosure and the current owners—usually banks—were unloading them. Another 12% were short sales. That means the current owners were selling them for less than the money owed on the mortgage(s).
In other words, about 4 in 10 sales were by people who were highly motivated to get rid of the properties even if they couldn’t get very high prices. That helps explain why ordinary sellers are having such a hard time finding buyers. The chart calls them “non-distressed,” but a lot of them are feeling quite distressed anyway, thank you.
The survey also found that total sales fell 19% from September to October as economic and financial conditions worsened. It’s bad out there.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.