Homebuyer demand appears to be intensifying, especially among lower-priced REO properties, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey released Tuesday.
[IMAGE]Time-on-market for move-in ready REO was just 10.1 weeks in November, the lowest in 15 months, according to the HousingPulse study. Time-on-market for damaged REO was even lower at 9.0 weeks, also the lowest in 15 months.
Distressed properties accounted for a sizeable 46.1 percent of home purchase transactions last month, based on data compiled for the HousingPulse distressed property index which uses a three-month rolling average.
November marked the 23rd month in a row that the study's distress index has come in above 40 percent.
Short sales were the largest segment of the distressed property market during the month of November, accounting for 17.6 percent of total home purchase transactions tracked in the HousingPulse survey.
Move-in ready REO was the next largest group of distressed properties with a 15.2 percent share, followed by damaged REO which made up 13.3 percent of total transactions.
Non-distressed properties accounted for the remaining 53.9 percent of home purchases in November, according to the survey results.
Despite the uptick in demand, the glut of distressed properties continues to put downward pressure on home prices.
[COLUMN_BREAK]According to HousingPulse, the average short sale sold for $209,200 in November, while the average move-in ready REO sold for $189,700. Damaged REO sold for far lower at $98,600.
At the same time, non-distressed properties sold for an average of $258,900.
The authors of the survey noted in their report that the appraisal system for mortgage originations uses comparative values from both distressed and non-distressed properties, and they say appraisers are often unaware of the interior condition of foreclosed homes or the special circumstances of short sales.
Prices agreed-to in purchase and sales contracts are sometimes not being supported by appraisals for mortgage financing that use disparate comparables, according to the report.
These properties then sell to cash buyers for less, causing declines in average home prices, the authors explained.
Real estate agents responding to this month's HousingPulse survey commented on the appraisal system and how the low prices for distressed properties impact overall home prices.
""The foreclosure/short sale markets are making it difficult to get non-distressed homes to appraise. This is holding off a market comeback in my area,"" reported an agent in Maryland.
""We could sell the homes for more but the appraisals are an issue since they are using short sales and foreclosures as comps,"" explained an agent in Florida.
Another agent based out of Michigan added, ""Given the multiple offers and the short time on the market, one would expect that prices would be on the increase; however, appraisal guidelines are holding it back.""
The HousingPulse Tracking Survey from Campbell Surveys and _Inside Mortgage Finance_ polls approximately 2,500 real estate agents nationwide each month to assess market trends surrounding homes sales and mortgage lending.