Foreclosure Mess Prompts Homebuyers to Avoid Distressed
Properties, Latest Campbell/Inside Mortgage Finance Survey Reveals
WASHINGTON, D.C. (November
controversy surrounding foreclosures is taking its toll on the housing
market as a significant share of home shoppers refused to even look at
distressed properties in October, according to the latest
Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market
Meanwhile, both the share of
home purchases involving distressed properties and average prices for
foreclosed properties fell last month, the survey found.
News reports that major
servicers were pulling real estate owned or foreclosed properties off
the market, including some already under contract, clearly spooked
would-be homebuyers. The closely-watched monthly survey found that 14%
of owner-occupant homebuyers and 6% of investors refused to view
foreclosed properties in October. This homebuyer fear was even worse for
short sale properties where 30% of owner-occupant shoppers and 20% of
investors refused to view these homes.
Servicing problems disrupted
both short sales and REO sales last month. Survey results show that 24%
of closings scheduled for October were delayed or canceled due to issues
with short sales, while 12% were delayed or canceled due to REO title
properties have dominated home sales for much of this year, recent
foreclosure problems helped trigger a noticeable dip in their share of
the market last month. In October, distressed properties accounted for
44.3% of transactions tracked in the latest survey – down from 47.5% in
Not surprisingly, the drop
in overall distressed property sales activity helped produce a decline
in average prices for short sales, move-in ready REO and damaged REO in
October. At the same time, average prices for non-distressed properties
"It's clear that decreased
homebuyer demand for distressed properties has resulted in lower
prices," commented Thomas Popik, research director for Campbell Surveys,
"Homebuyers were squeezed into non-distressed properties that resulted
in a higher average price for this type of transaction."
“With the foreclosure
‘fraud’ issue still out there, buyers are skeptical to purchase a REO.
Until the fraud mess gets cleared up, most of our clients are second
guessing their interest in REO properties,” reported a Florida real
estate agent responding in the latest survey.
short sales are more than likely to fail before closure, I completely
discourage buyers from wasting their time or mine if they NEED to buy a
home. There is no telling how many good deals or properties the buyer
could miss while waiting for any type of answer (even a ‘no’ takes up to
12 months),” complained an agent located in Michigan.
The Campbell/Inside Mortgage
Finance Monthly Survey of Real Estate Market Conditions surveys more
than 3,000 real estate agents nationwide each month and provides
up-to-date intelligence on home sales and mortgage usage patterns.
For more information
on the survey contact: John Campbell at Campbell Surveys, (202)