For the past several years Real Estate Short Sales have been the dominating the listings in our Housing Market. More people were “under water” than not! At one point the Short Sale listings were tracking side by side with the Bank Owned listings and there was even a time in our local Riverside County Market, Short Sale listings surpassed the Bank Owned listings. However just as with Bank Owned listings, Short Sale listings are slowing down. This due in part to the fact prices have been driven up substantially by the Hedge Fund investors therefore making it possible for more people to realize equity and offer their home as standard sale! This is great news however temporary due to the fact the Hedge Fund Investors have stopped buying as they acted as their own worst enemy while pushing the prices up. Their buy and hold strategy only worked if they could realize at least a 5% cap rate and many investors were so caught up in the frenzy they bought up property in bulk and only realized after the fact their cap rate was around 3%. As the Hedge Fund Investors have been backing out, the prices have slowly been settling.
Another reason the Short Sale listings are slowing down is the Banks have changed their criteria for Short Sales over and over again. One recent major change that occurred is in regards to FHA loans. If the Seller has an FHA loan and wants to sell their home on a Short Sale, they must go at least 30 days late. Many sellers are trying to avoid hurting their credit as much as possible and do not wish to go late on their Mortgage. This has many sellers re-thinking a Short Sale altogether.
Whatever the case may be the Short Sales have definitely taken a backseat to the Standard listings as of late. And this is a good thing!! However, one thing for sure is that we don’t know how long this will last!
It could be Short Sales return with a vengeance but only time will tell! The only thing constant in the Real Estate Space is change. www.teamreliablerealty.com