In what could be an ominous sign for the still fragile U.S. housing market, the percentage of distressed properties in home purchase transactions climbed to the highest level in nearly a year in January.
At the current rate of increase, distressed property transactions could account for the majority of home sales within just a few months. Already, in the key state of California, distressed property transactions account for 66% of the market.
And their prices dropping
According to the January housing report from Campbell Surveys, over the past 12 months average prices for damaged REO (real estate owned by banks) have declined by 16% while average prices for move-in ready REOs have declined 20%. Non-distressed prices have declined only 4% while the prices for short sales have been nearly flat.
Another wrinkle: financing issues abort sales…
“The local housing market is not the issue. The issue is dealing with lenders. Not only do they look for any excuse not to lend money, they frequently jeopardize the deal at the last moment. The time needed to close a transaction is now approaching 60 days due to lender practices,” complains a real estate agent in the Campbell report.