Market Conditions in Margate>Question Details

Meir Aloni, Real Estate Pro in Plantation, FL

Foreclosure Discounts Vanishing

Asked by Meir Aloni, Plantation, FL Tue Nov 20, 2012

Daily Real Estate News | Tuesday, November 20, 2012
Foreclosure discounts have nearly dried up due to low inventory levels, according to the latest housing reports.
The average discount nationwide for foreclosure properties has fallen to 7.7 percent, according to Zillow research. In some parts of the country, there is no foreclosure discount when compared to other sales.
“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” says Stan Humphries, Zillow’s chief economist.
The smallest foreclosure discounts can be found in:

**Las Vegas (0%) **Phoenix (0%) **Sacramento, Calif. (0.7%) **Riverside, Calif. (1.8%)
**San Diego (2.4%) **Miami-Ft. Lauderdale (2.9%) **Los Angeles (4.2%) **San Francisco (4.7%)
Meanwhile, the places with the largest

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Ron Thomas’ answer
This is not entirely true:
2-3 years ago, everyone, including Appraisers, eliminated Shortsales and REO's from their list of Comps. The "distressed" sales were distorting the market, and we want to exclude them.

It would take an MIT Program to figure out what a house would/should be worth now without distressed houses taken into account:
It would not be just a matter of not using SS and REO's as comparrisons, because every sale for the ;ast 3 years has been affected by the distressed sales. Even a "traditional/normal" sale has been lowered.
At their peak, SS & REO's accounted for 80% of the sales, so no one could effectively ignore them any longer.
You can't say that a house that was worth $1,000,000 in 2005, and is now "worth" $550,000 does not have a "foreclosure discount".
But, like I say, it would take an MIT Program to calculate what any house should be worth:
It's not fair, but it is REALITY!
0 votes Thank Flag Link Tue Nov 20, 2012
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