In the wake of the housing market collapse, a number of prospective buyers found it difficult to find the financial stability needed to purchase property. However, a recent report found that the number of short sales rose significantly at the beginning of 2012, as buyers capitalized on the affordable prices of these units.
Short sales surged 33 percent across 32 states in January from the previous year, according to a recent report from RealtyTrac. The report notes that Georgia, a state which has coped with a high number of distressed properties in recent years, experienced a 113 percent increase in short sales during this period. In addition, Michigan, Wisconsin, California, Texas and Arizona were also recognized for gains in these transactions.
"Short sales have long held great promise as a market-based solution to the nation’s foreclosure problem, but short sales transactions over the past three years have actually declined after peaking in the first quarter of 2009," said RealtyTrac vice president Daren Blomquist.
It's believed that the bargain price of short sales is what caused the increase in home buying activity. The report indicated that the average price of one of these homes fell 4 percent in January from the end of 2011 to $174,120. This is 10 percent lower than the average price a year earlier.
"January foreclosure sales numbers, along with first-quarter foreclosure activity, strongly indicate that downward trend is ending, and we believe 2012 could be a record year for short sales," Blomquist added.
However, more than 100,000 properties started the foreclosure process in March, which is a 7 percent increase from March. Should this trend continue as the housing market enters its peak buying season that often occurs in the spring and summer months, this wave of foreclosures could result in even more short sales during the course of 2012.
Meanwhile, Fannie Mae and Freddie Mac recently reported that a pilot program to sell real estate-owned properties in their inventories in bulk to investors has been so successful, that the initiative could soon be applied to the short sale sector. Once these home are purchased, investors have the option of fixing them up and reselling them for a profit or converting them into affordable rental units. Whichever they choose, this could help cut down on the vacancy rate in a number of struggling markets, subsequently causing property values to stabilize.
As housing conditions continue to gain momentum, 2012 could be a good year for many households to finally make the transition to homeownership.
