Short sales jumped to 15.9 percent of home purchase transactions last month, according to a monthly survey by Washington, D.C.-based business research firm Campbell Surveys and mortgage industry publication Inside Mortgage Finance.
That’s the highest percentage of short sales since the survey first launched in July of last year, when short sales made up 12.5 percent of transactions. Before January, the peak had been 15.1 percent in October. That figure fell to 12.6 percent in November and rose to 13.7 percent in December.
Sales of damaged real estate owned (REO) properties and move-in ready REO properties made up 13.4 percent and 13.8 percent of January home purchase transactions, respectively.
In November, those numbers were 12.3 percent and 12.6 percent, respectively, and rose to 12.4 percent and 13.1 percent in December.
"Short-sales activity took a temporary dip in November around the expected expiration of the first-time homebuyer tax credit," said Thomas Popik, the survey’s research director, in a release.
"Few first-time homebuyers wanted to take the chance that their short-sale transaction wouldn’t be approved by the Nov. 30 deadline. But now that the tax credit has been extended, we see first-time homebuyers once again snapping up attractively priced short sales."
Because mortgage lenders often take several months to approve a short sale, such transactions are most attractive to first-time homebuyers who don’t need to also sell a current home in a given time period, the release said.
The release also outlined possible reasons why short sales might be more palatable than REO transactions.
"Short sales typically result in lower lender losses and houses left in more saleable condition. Moreover, borrowers that agree to a short sale can often buy another house with mortgage financing after only two years. For borrowers going though the foreclosure process, mortgage financing can be unavailable for a period of five to seven years."
Short sales typically sell for only 91 percent of listing price, while move-in ready REOs sell for 99 percent of listing price, on average, the release said.
The monthly survey polls more than 1,500 real estate agents and brokers online nationwide from Campbell Surveys’ database of 70,000 active agents in the first week of every month, according to company founder John Campbell.
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