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Scott Marks 1 p.m., May 24
The recently reported decline in real estate sales figures can be attributed to the decline in foreclosures and other “distressed” sales, according to the California-based market tracking firm PropertyRadar.
Distress sales, including foreclosures and short sales, declined 46.5 percent last month as compared to June 2012. Traditional sales, where sellers have equity in their properties, were up 31.3 percent over the same period as rising values allow more would-be short sellers to escape without negotiating discounted payoffs with their lenders.
The PropertyRadar report blames “government intervention that has slowed the flow of distressed properties to the marketplace” for the reduced number of distressed sales, which still make up nearly a third of all California transactions. About 2.1 million homeowners (nearly a quarter of the state’s total) still owe banks more than their home is worth, and another 500,000 are estimated to have less than a 10 percent equity share.
Even while acknowledging rising interest rates will likely affect the market in the coming months, PropertyRadar president and CEO Sean O’Toole remains confident that housing prices will remain high even as wages stagnate and higher rates sap buyers’ purchasing power.
“Homeowners, and even savvy investors, tend not to think of home prices in terms of how affordable the monthly payment is for the buyer,” says O’Toole. “Prices are unlikely to fall to accommodate the new reality that buyers can afford less than they could just a few weeks ago.”