In April, the New York Times reported that short sales were on the decline. The expiration of a federal tax exemption for forgiven mortgage debt contributed to this decline. Rising home prices also helped many homeowners regain equity lost during the Great Recession, thus preventing many short sales.
To quantify the decline in short sales this year, I compared the number of short sale properties sold per year since 2010. Since there are still a few more days left in 2014, the total 2014 number isn’t known. However, the year to date total of 1,756 will be close. When compared to the total number of short sales sold in 2013, which was 5,540, there has been a 68% decline in 2014.
The chart below shows the rapid decline of short sales sold since 2011. This indicates the once depressed real estate market recovering to a more normalized market.
Shorts Sale Listings Sold in San Diego County
Short sales today aren’t offering the same value they once were. When a seller decides to short sell his/her home, the price that the seller and buyer agree upon isn’t always the final price. The lender will order a 3rd party valuation of the property either in the form of a Broker Price Opinion (BPO) or the lender will order an appraisal to determine the fair market value of the subject property.
If the agreed to price is much lower than market price, the lender will likely counter back at a higher price or even reject the offer. With home prices on the rise, fair market values are increasing, thus making short sales less of a bargain.
To learn more about short sales and see a summary of a typical short sale time line, see gavingrantrealtor.com/short-sale.