This morning I went back through our MLS data and charted how many sales there have been for short sale and lender owned homes for the past few years. I was curious to see what the trends looked like and if they matched up what I’ve been seeing lately, and for the most part my assumptions were true. Below are the numbers:
| Short Sales | Bank Owned | |||
| 1999 | 1 | 1999 | 67 | |
| 2000 | 3 | 2000 | 82 | |
| 2001 | 7 | 2001 | 98 | |
| 2002 | 6 | 2002 | 115 | |
| 2003 | 8 | 2003 | 75 | |
| 2004 | 4 | 2004 | 74 | |
| 2005 | 0 | 2005 | 29 | |
| 2006 | 2 | 2006 | 112 | |
| 2007 | 31 | 2007 | 149 | |
| 2008 | 132 | 2008 | 297 |
Keep in mind these results are from the Tucson MLS and because I searched on the keywords “short sale” and “lender” we may have a few extraneous results. I’ve been in touch with the MLS staff concerning the lack of Tucson MLS designations for short sale and bank-owned homes and apparently they are working on a solution.
What we see are several trends dating back to 1999. There was a mild rise in short sales/bank-owned homes in 2002 which fell off during the housing boom, and then in 2005 there weren’t any short sale records in Tucson.. not surprising considering the inflated market.
In 2006, however, we see almost a 300% increase in bank-owned homes with only two short sales. This can be attributed to a couple things:
- Housing market was starting to trend downward
- A lot of people who refinanced and/or took out HELOCs in 2005 with the thought of selling in the near future were suddenly faced with a mortgage higher than their home’s value
- Short sales were still fairly uncommon to real estate agents and homeowners
In 2007 as real estate agents became more educated on short sales and received the proper training closed short sales went up. So far this year, in only seven months, we are already at 132 closed short sales which is a dramatic increase from just last year. Lender owned homes have also mushroomed to 297 closed deals this year and will likely surpass 450 sales before the year is over.
So what will the next year or so look like for short sales and bank-owned homes? Personally I think we will probably spike at the end of this year, perhaps next spring, and hold fairly steady for a bit while banks unload their excess inventory and agents continue to be successful in short sales.
If the “Housing and Economic Recovery Act of 2008” being proposed by Senators Chris Dodd (D-CT) and Richard Shelby (R-AL) actually is passed I think this number may go up in the short term; in my opinion the bill, while well intentioned, is fraught with potholes and danger signs that can’t be ignored and it practically enourages homeowners to go into default on their mortgage. Read the .pdf linked above and see if you come to the same conclusion!
