(Read More: Short Supply Has Home Sales ‘Squeaking’ Out Gains)

While Humphries does not make the connection to rising bank repossessions in the report, his numbers do. They show inventory easing much more on the low end of the market, where distressed homes tend to be.

“The greatest year-over-year decreases in inventory were among more expensive homes, with the availability of top-tier and middle-tier properties each falling 15.7 percent year over year. The number of bottom-tier properties for sale on Zillow nationwide fell only 2.5 percent in early June compared to June 2012.”

As more bank-owned homes hit the market, inventories are likely to turn positive again in the near future.

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC.

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100812845

(Read More: Pending Home Sales Soar Despite Rough Winter)

Banks are making more of an effort to do short sales instead of taking a home to foreclosure, and new federal guidelines are streamlining the process. That led to a 15 percent drop in sales of bank-owned homes and a 6 percent increase in short sales. This has helped home prices because short sales on average sell for a higher price than do bank-owned homes, because they are usually neither abandoned nor vandalized.

“Although foreclosure-related sales represent a shrinking share of total sales, primarily because of fewer bank-owned purchases, distressed sales are still a disproportionately high portion of the overall housing market,” said Daren Blomquist, vice president of RealtyTrac. “And while distressed properties — whether bank-owned, pre-foreclosure or short sales not in foreclosure — are still selling at a significant discount compared to non-distressed properties, average distressed property prices are increasing in many markets thanks to strong demand and limited inventory.”

(Read More: Housing May Not Be as Healthy as It Looks: NAHB Pro)

Limited inventory continues to be the key in today’s housing market, driving prices higher than most analysts expected. This is surprising, as distress in the market has not simply vanished. There are currently 1.7 homes in the foreclosure process and 1.5 million more seriously delinquent loans (90 days without a payment), according to a new report from Lender Processing Services. Banks are being more aggressive with loan modifications and principal forgiveness, but many of these homes will inevitably end up going back to the banks.

“Inventories continue to be low because non-distressed sellers are largely absent from the market, apparently waiting for prices to increase even more before they decide to sell,” noted Blomquist. “I think we are seeing signs of the shadow [foreclosure] supply hitting, but more on a market-by-market basis and often in the form of short sales as opposed to REO [bank-owned] sales — although REO sales are starting to show signs of life in judicial foreclosure markets with bigger backlogs.”

(Read More: Homeowners Rise Above Water on Mortgages)

Strong investor demand for these properties is pushing prices higher, even creating bubbles in some of the formerly hardest hit markets, like Phoenix and Las Vegas. If prices get too high, however, and investors can’t reap the returns they need, then supplies could grow. So far that has not happened, but home prices are rising far faster than anyone predicted.

(Read More: Taking The Real Estate Recovery Local)

Article source: http://www.cnbc.com/id/100503223

(Read More: Pending Home Sales Soar Despite Rough Winter)

Banks are making more of an effort to do short sales instead of taking a home to foreclosure, and new federal guidelines are streamlining the process. That led to a 15 percent drop in sales of bank-owned homes and a 6 percent increase in short sales. This has helped home prices because short sales on average sell for a higher price than do bank-owned homes, because they are usually neither abandoned nor vandalized.

“Although foreclosure-related sales represent a shrinking share of total sales, primarily because of fewer bank-owned purchases, distressed sales are still a disproportionately high portion of the overall housing market,” said Daren Blomquist, vice president of RealtyTrac. “And while distressed properties — whether bank-owned, pre-foreclosure or short sales not in foreclosure — are still selling at a significant discount compared to non-distressed properties, average distressed property prices are increasing in many markets thanks to strong demand and limited inventory.”

(Read More: Housing May Not Be as Healthy as It Looks: NAHB Pro)

Limited inventory continues to be the key in today’s housing market, driving prices higher than most analysts expected. This is surprising, as distress in the market has not simply vanished. There are currently 1.7 homes in the foreclosure process and 1.5 million more seriously delinquent loans (90 days without a payment), according to a new report from Lender Processing Services. Banks are being more aggressive with loan modifications and principal forgiveness, but many of these homes will inevitably end up going back to the banks.

“Inventories continue to be low because non-distressed sellers are largely absent from the market, apparently waiting for prices to increase even more before they decide to sell,” noted Blomquist. “I think we are seeing signs of the shadow [foreclosure] supply hitting, but more on a market-by-market basis and often in the form of short sales as opposed to REO [bank-owned] sales — although REO sales are starting to show signs of life in judicial foreclosure markets with bigger backlogs.”

(Read More: Homeowners Rise Above Water on Mortgages)

Strong investor demand for these properties is pushing prices higher, even creating bubbles in some of the formerly hardest hit markets, like Phoenix and Las Vegas. If prices get too high, however, and investors can’t reap the returns they need, then supplies could grow. So far that has not happened, but home prices are rising far faster than anyone predicted.

(Read More: Taking The Real Estate Recovery Local)

Article source: http://www.cnbc.com/id/100503223

(Read More: Mortgage Deduction Is Popular, but Few Claim It)

Nearly one third (1.3 million) of sales in the past twelve months have been distressed, either REO (bank-owned homes) or short sales, according to LPS. That compares to just 226,000 in 2005 when overall home sales were twice the pace they are today.

It doesn’t stop there. The California Homeowners Bill of Rights goes into effect January 1, 2013. Similar legislation in Nevada doubled the foreclosure pipeline over the past year.

Another reason for the drop in new foreclosures may be a surge in loan modifications involving principal reduction. These are also mandated by the mortgage servicing settlement. Principal reduction modifications jumped 62 percent from October to November, according to Amherst Securities’ Laurie Goodman.

(Read More: Mortgage Applications Rose Last Week)

Article source: http://www.cnbc.com/id/100280694

Back in 2008 and 2009, foreclosed homes were selling for double-digit discounts, but nowadays savings are much slimmer, especially in some California cities, according to an analysis by real estate site Zillow.

In Sacramento, buying a bank-owned property saves you less than 1 percent, and in Riverside it’s only 1.8 percent. That’s compared to a current national average of 7.7 percent, and 27.4 percent in the city with the highest discount — Pittsburgh, Pa. In San Francisco, the average discount is 4.7 percent. San Francisco’s foreclosure discount peaked at 20.4 percent in January 2008.

Here’s a look at some currently bank-owned homes in San Francisco:

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When the housing market was falling like a rock, the large discounts available for foreclosed properties led to the popularity of foreclosure bus tours, which real estate agents are still conducting in the Bay Area and elsewhere. But it hardly seems worth putting in the effort to learn about the foreclosure process for a tiny discount.

In two cities, Las Vegas and Phoenix, Zillow found that buying a foreclosure offered no price advantage at all.

“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 simply to take advantage of historic affordability,” said Zillow Chief Economist Dr. Stan Humphries. “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 investors.”

Carrie Kirby is a freelance writer who recently returned to the Bay Area after living for six years in Chicago. Carrie is more heavily invested in real estate than she ever expected to be, since she and her husband are now long-distance landlords of their Chicago home, and have also purchased a house in Alameda. She posts about interesting properties and real estate trends in San Francisco and Silicon Valley every Tuesday. Carrie also shares money-saving tips on her blog, Frugalistic Mom.

Article source: http://blog.sfgate.com/ontheblock/2012/11/13/foreclosure-discounts-shrinking-away/