Indy Bank Owned Foreclosures and Short Sales Remain Slow

by on Foreclosures

Although home sales activity for the month of February is still weak, the Indiana Association of Realtors is optimistic that short sales and bank owned foreclosures will be able to boost sales for 2011. Of course, a major factor for the increase in activity would be the overall economic trend.

According to the data compiled by the IAR, February sales showed there were 1,166 homes sold, including Indianapolis foreclosures for sale as well as other types of existing homes. This figure is 14 percent fewer than the numbers recorded during February 2010. Sellers of these properties only enjoyed about 88.5 percent of the list price, while last year, sellers took home 90.1 percent of the list price. The decline can be attributed to the buyers’ tough bargaining as well as price cuts.

Another sign showing the slowly rebounding market is the growing inventory of homes for sale, a considerable percentage of which are bank foreclosures in Indiana. Last month, there were 16,400 homes from thirteen metro counties. Based on the present sales pace, the inventory of homes will be depleted in about 9.2 months. A year ago, the pace was 8.3 months.

Meanwhile, sales of existing homes and bank owned foreclosures declined to 3,212 for the said month, 7.1 percent fewer compared to a year ago. According to the Metropolitan Indianapolis Board of Realtors, last year’s home sales activity was actually boosted by the federal tax credit incentive, which attracted much more buyers and made this year’s sales activity pale in comparison.

The Association of Realtors is quite hopeful that things will improve come spring season, especially if the unemployment rate, which is one of the factors for dragging home sales activity down, declines. Based on the past months, such decline is possible, and with mortgage rates quite low, at around 4.3 percent, if the buyer takes out a loan payable in 30 years, there is no reason for buyers not to invest in bank foreclosure homes.

In Boone County, sales activity has been driven mostly by short sales as well as bank owned foreclosures sales. Obviously in terms of affordability, short sales usually allow the seller to recover as much as 81 percent of the property’s market value compared to a foreclosure’s 59 percent. Of course, you have to consider the complicatedness of a short sale transaction. Most cash buyers choose to purchase foreclosed homes because the sales process can be simple and quick.