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REO sales no longer play the dominant role they once did in real estate transactions. The recent decline in REO sales, along with the decrease in inventory, is helping the market see an improvement in prices, according to a report from ""Corelogic"":http://www.corelogic.com/.
[IMAGE]REO sales showed a 35 percent year-over-year decline in October 2012 and a 60 percent decrease from the April 2009 peak, CoreLogic revealed. In addition, over the past year, REO sales have averaged 51,000 per month, down from 65,000 in the previous 12-month period. The price of REOs have also gone up, averaging $135,000 in October 2012, up 3 percent from a year ago.
Meanwhile, overall home sales increased 6 percent in 2012 to 4.2 million, with non-distressed sales seeing an 11 percent increase, CoreLogic reported. On the other hand, REO sales in 2012 fell by more than 20 percent to 600,000. Short sales continue to play important role in preventing foreclosure and have increased 23 percent to 370,000 units, the highest level since the housing market began to decline.
As REO sales diminish, home prices benefit since REOs generally sell at a more than 20 percent discount, according to the data provider. November 2012 data from CoreLogic shows REO sales averaged a discount of 47 percent compared to non-distressed sales, while short sales were discounted by about 25 percent.
Lack of inventory also helped to sustain home price increases in 2012. According to Corelogic, months' supply of inventory reached 12 months in July 2010, but as of November, months' supply has fallen to 4.8 months.
Looking ahead, CoreLogic expects 2013 to be ""poised for further recovery"" and projects prices will increase 6 percent. According to the data provider, high affordability, diminishing REO sales, and the low inventory will fuel the price gains expected ahead.
As prices rise, CoreLogic also explained more inventory will become available as underwater borrowers currently locked out of the market and opportunistic sellers begin to list their homes.
