The latest foreclosure report from RealtyTrac came with both good and bad news. That’s certainly not unusual; most economic reports today come with that same mixture.
Commercial real estate pros hoping for more stability in the housing market had to be cheered to learn that according to RealtyTrac’s third-quarter foreclosure and short sales report, 193,059 U.S. properties in some stage of foreclosure or owned by banks were sold during the third quarter. That number is actually down 3 percent from the third quarter of 2011.
If you’re a commercial real estate professional, you want that number to continue to fall. The fewer foreclosure properties that are sold, the faster housing values will rise. And when housing values rise, consumers feel wealthier. That leads to more spending, which, in turn, helps retailers and leads to commercial expansion. You know the drill.
But while the number of foreclosures sold fell on a year-over-year basis, the numbers weren’t as promising when you look at how the third-quarter figures compared to foreclosure sales in the second quarter of the year. Third-quarter foreclosure sales actually rose 21 percent from the second quarter.
Here’s how dramatically foreclosure sales impact housing prices: According to RealtyTrac, homes in foreclosure or owned by banks sold at an average price that was 32 percent lower than the average price of a home not in foreclosure during the third quarter of this year.
That puts a drag on housing prices across the country. As residential real estate specialists will tell you, don’t expect housing prices to rise significantly until the glut of foreclosed properties is cleared.
And, according to this latest report, the United States still has plenty of foreclosures to sell before that glut lessens.