Distress Properties Soar In Tallahassee
For our long-time readers, it should not come as a big surprise when we report that the number of distress properties in Tallahassee is soaring. Banks are finally starting to clean up their portfolio's and that means that they are not dragging their feet (as much) on converting lis pendens to foreclosure sales.
In the real estate graph to the right, we show the trend of lis pendens filings (the start of the foreclosure process shown in green) and the trend of annual foreclosure sales (the end of the foreclosure process shown in red). By comparing the two trends, we can calculate the ratio of foreclosure sales to lis pendens filed in order to see "how serious" lenders are pushing delinquent loans.
The blue line in the graph shows that our current trend has hit 41%, which tells us quite a bit about distress properties in the Tallahassee real estate market. First of all, this is an all-time high, which suggests that fewer delinquent loan issues are being resolved outside of the foreclosure process.
Short sales are a popular solution, and our Tallahassee Short Sales Page is growing on a daily basis. Home sellers are letting the banks decide what to do in the case of accepting an offer from a buyer, and we have seen the evolution of the short in the past few years move from a tiny portion of the market to a major process in how homes are sold in Tallahassee.
Pay Attention To Foreclosure Sales In Tallahassee
Currently, we are seeing 60 foreclosure sales in Tallahassee each month. Considering that Tallahassee averaged fewer than 10 per month prior to 2008, this is something we must observe to see how large our inventory of distress properties in Tallahassee is growing.
One way to look at this growing trend is to look at foreclosures (most foreclosure sales are closing with the existing lien holder taking ownership of the property, thus not making an impact on the balance between supply and demand) as a source on the supply side of the housing market. Just about every foreclosure needs to be resold (the banks refer to these as REO-Real Estate Owned).
So here's the math .... 60 foreclosures entering the market each month is roughly 14% of the new listing inventory. Considering new construction has historically been about 20% of the market, we can say that foreclosures are consuming 70% of the new construction market share... Foreclosures are replacing builders! And this trend is climbing!
Too much talk of market recovery is overlooking the fact that there is going to be a lot of distress properties in Tallahassee for quite some time. Take the time to look at the list, it is unbelievable.
Home Sellers Are Competing With Distress Properties
Distress Properties are no longer a minority of the market and today's home sellers must compete with the vast supply of these homes. My advice ... Stay or Go! Get out of the market if you are not going to price your home competitively. The failure rate among current home sellers is rising, and it does the market no good to have distractive inventory. If you are not sure what price on your home would be competitive, drop us a line and we will help you out.
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