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Foreclosure Deals Drop 22% as Rising Prices Delay Sales
Dan Levy / Bloomberg Businessweek / May 30, 2013
Foreclosure (HOMFCLOS)-related U.S. home sales fell 22 percent in the first quarter from a year earlier as rising prices reduced the incentive to sell for owners who owe more than their properties are worth, RealtyTrac said.
A total of 190,121 homes in some stage of foreclosure or taken by banks were sold this year through March 31, down 18 percent from the previous three months, the data seller said today. Those deals, including short sales, or transactions in which lenders let homeowners sell for less than what they owe, accounted for 21 percent of first-quarter residential transactions, compared with 25 percent a year earlier.
“Prices going up take away the urgency from banks and homeowners from having to do a short sale,” Daren Blomquist, vice president of Irvine, California-based RealtyTrac, said in a telephone interview. “Short sales have been seen as an alternative to foreclosure, and some people were counting on that to continue in 2013, but we aren’t seeing evidence of that right now.”
U.S. home values rose 10.9 percent in the 12 months through March, the most in seven years, after a 9.4 percent gain in February, according to the S&P/Case-Shiller (SPCS20Y%) index. All 20 cities in the gauge had year-over-year price increases. Low interest rates, scarce inventory and rising consumer confidence are helping fuel a “continued, gradual recovery” in the housing market, said Brian Jones, a senior U.S. economist for Societe Generale in New York.