(Source: By Leslie Berkman, The Press-Enterprise, Riverside, Calif.) - Inland Southern California houses that were bank-owned or in some stage of foreclosure sold for 18 percent less on average than other inland houses in the first quarter of this year, according to a report released Wednesday.
That was less than the 27 percent average discount that buyers of foreclosure tarnished homes realized nationally, said RealtyTrac, an online marketplace of foreclosure properties that analyzed first quarter sales data.
But that does not necessarily mean that Inland buyers of distressed homes got less of a bargain, said Daren Blomquist, a RealtyTrac analyst.
In the region that encompasses Riverside and San Bernardino counties, homes in the foreclosure process, which begins when a lender posts a notice of default, and bank-repossessed homes represented half of total home sales in the first quarter of 2011, whereas nationally they accounted for just 28 percent.
“In markets where foreclosures start making up 50 percent or more of the market, the discount is lower because they are the dominant force in the market and drive down the average prices overall,” said Blomquist.
“I think there probably are lots of bargains available in the Inland Empire. But there are good bargains on properties that are not in foreclosure as well as those in foreclosure,” he said.
The discounts as reported by RealtyTrac do not take into account the condition of the houses sold, which often is worse for vacated foreclosed homes that are exposed to vandalism than for houses that are owner occupied, say real estate experts.
Mike Novak-Smith, a Moreno Valley-based real estate agent who specializes in selling foreclosed homes for banks, said banks will give “a reasonable deal” that may be better than a private homeowner because they do not have an emotional attachment for the property and want to sell it in “in a reasonable marketing time for the area.”
“If the house is worth $150,000, they won’t sell it for $120,000, but by the same token they won’t overprice it at $190,000 hoping it will sell,” he said.
Distressed sales, which include houses sold by banks and houses sold by delinquent owners at prices less than enough to repay their mortgages, numbered 8,522 in Riverside and San Bernardino counties in the first quarter. That was 18 percent fewer than in the fourth quarter of 2010 and 35 percent fewer than in the first quarter of 2010.
The average sales price of Inland distressed sales in the first quarter ended in March was $183,215, down from $184,267 in the fourth quarter of 2010 but up from $177,197 a year earlier.
Blomquist said a sign that California may emerge from the mountain of foreclosures ahead of the rest of the nation is that at the current rate of sales, it could clear out its inventory of 133,000 bank-owned houses in a year if there were no more foreclosures. By contrast, he said the nation currently has a two-year inventory of bank-owned homes.
Reach Leslie Berkman aqt 951-368-9423 or lberkman@PE.com
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A service of YellowBrix, Inc. Publication date: 2011-05-26