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According to the data released by RealtyTrac, total number of foreclosed properties sold in the second quarter of 2012 decreased 12% from the prior quarter and 22% from the prior-year quarter to 224,429 properties. This was the first annual drop in foreclosed property sales after rising for five consecutive quarters.
Of the total foreclosed properties sold, 107,298 properties were at some stage of foreclosure (down 10% from the prior quarter and 9% from the year-ago quarter), while 117,131 were bank-owned (decreasing 13% sequentially and 31% year over year).
Nevertheless, the sale of pre-foreclosed (in default or scheduled for auction) and bank-owned residential properties was 23% of the total residential sale, increasing from 22% in the prior quarter and 19% reported in the year-ago quarter. In addition, properties that were in the early stage of foreclosure were sold within 319 days on an average, after passing through the foreclosure process. Properties owned by banks that were sold had been repossessed about 195 days before sale.
Further, average selling price of properties was $170,040, up 6% from the first quarter of 2012 and 7% from the second quarter of 2011. The increases were mainly due to limited supply of foreclosed homes and seasonally high demand for homes. This was the first annual jump in average sale price since the second quarter of 2010.
Moreover, the properties were sold at a discount of 32% to the average selling price of non-foreclosed properties. Further, both Nevada and Georgia recorded the highest foreclosed property sales accounting for 43% of all residential home sales, followed by California (40%), Michigan (35% and Arizona (33%).
The plunge in foreclosed property sales primarily resulted from a large number of pending foreclosure cases that were on hold as the mortgage servicers sorted out the foreclosure mess. Now, with the announcement of the $25 billion settlement deal between five mortgage servicers – JPMorgan Chase & Co. ( JPM - Analyst Report ) , Bank of America Corporation ( BAC - Analyst Report ) , Citigroup Inc. ( C - Analyst Report ) , Ally Financial Inc. and Wells Fargo & Company ( WFC - Analyst Report ) , 49 states’ attorneys general and the regulators, the number of properties entering foreclosure process has elevated.
This, in turn, is expected to lead to higher foreclosed property sales in the upcoming quarters. Further, the lenders are in support of short-sales, which is a quicker way of retrieving some amount from their mortgages than waiting for foreclosures (a more expensive and time-consuming process).
However, overcoming the foreclosure crisis is expected to take some time. Also, home prices across the nation will be pressurized as many properties are apprehended to come to the market due to increased foreclosure activities. Though the huge surge in foreclosures may dampen the housing prices in the near term, this will enable the housing market to revive over the longer term.
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