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NEW YORK – March 26, 2012 – Foreclosures are expected to pick up as soon
as banks begin to clear their backlog of troubled loans – RealtyTrac is
projecting a 25 percent increase in 2012.
If an increase does occur, some housing experts wonder how it will
impact overall home prices, and whether the discounts for REOs will be
even larger this time around. For example, in metro areas like Las
Vegas, the average foreclosure sells at 6.1 percent less than a
non-foreclosure home. In Miami, the foreclosure discount is 7.1 percent,
according to data by LPS Applied Analytics. In some places, it’s even
more.
“A spike in sales of bank-owned homes can be bad news for other
sellers,” The Wall Street Journal reports. “And foreclosure sales make
it hard for prices to rise overall since they boost sales activity at
the lower end of the market.”
This time around, however, housing experts don’t expect the discounts in distressed properties to grow.
“More often than not, prices are determined more by demand than supply,”
Paul Dales, senior U.S. economist at Capital Economics. Areas with a
high number of REOs may have greater demand for REOs in good condition
and less supply for other properties. Plus, Capital Economics predicts
that demand will improve nationwide this year as the housing markets
starts to recover. Source
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