Foreclosed homes just aren't the bargain they used to be.
According to Zillow, the average discount on a foreclosed
residential property in September was 7.7 percent, compared to what
a homebuyer would pay for the same home in a conventional
transaction. That's down from a high of 23.7 percent in August
In fact, in some of the very cities that were hardest hit by the
foreclosure crisis, demand is now so strong there's little or no
discount at all for buying a foreclosure. Zillow reports that in
both Phoenix and Las Vegas buyers are currently paying the same for
foreclosed homes as they are for nondistressed properties, while
homebuyers in Sacramento and Riverside, California are realizing
average discounts of only 0.7 percent and 1.2 percent,
In Florida, the average foreclosure discount in Miami-Ft.
Lauderdale was a mere 2.6 percent, while the average reported for
Orlando was 4.6 percent.
Not just for investors anymore
"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," said Stan Humphries, Zillow's chief
economist. "Additionally, in areas such as Phoenix and Las Vegas,
where not long ago one out of every two homes sold was a
foreclosure re-sale, buying a foreclosure is no longer just for
Humphries said much of the demand is being driven by regular
homebuyers seeking to take advantage of historic affordability, a
term describing the combination of low home prices and mortgage
rates in comparison to prevailing incomes.
Compared to the same month one year ago, the average discount on
foreclosed properties declined in over three-quarters of the
metropolitan areas Zillow analyzed, and all areas are down from
their post-crash peaks.
Despite the overall decline in foreclosure markdowns, sizeable
discounts are still the rule in many metropolitan areas with lower
demand for home sales. The biggest average foreclosure discounts
were reported in Pittsburgh (27.4 percent), Cleveland (25.8
percent), Cincinnati (20.2 percent) and Baltimore (20 percent).
First published on MortgageLoan.com at: