Homeowners Discouraged by Short Sales; Investors Picking up Slack
While homebuyers are pursuing short sales with less enthusiasm because of the lengthy and unpredictable process, investors are finding them a new target of opportunity. Campbell/Inside Mortgage Finance HousingPulse Tracking Survey found that investors continued to boost their activity in the housing market during February and accounted for 24.2 of all housing transactions and 30.6 percent of short sales.
Distressed sales accounted for 48.7 percent of all housing sales in February based on a three-month moving average represented by the HousingPulse Distressed Property Index (DPI), the second highest level recorded by the survey and the 25th month in a row that the DPI has been above 40 percent.
Since September the percentage of investors buying homes has increased by 3.3 percentage points and the investor share of short sales by 4.7 points. In contrast, the proportion of homebuyers purchasing short sales has dropped since September.
Campbell says the waning interest of first-time homebuyers and current homeowners in short sale transactions is largely driven by dissatisfaction with the long-approval times of mortgage servicers and unpredictable closing dates. Investors do not have to deal with some of the resulting complications such as breaking a rental lease, moving from another home on short notice or finding themselves stranded between homes by an unanticipated delay or cancellation of the sale.
Mortgage servicers have been using "cash-for-keys" payments to motivate delinquent homeowners to engage in short sales. Cash-for-keys payments are often $3,000 or 1% of home value, but can reach up to $25,000 and more for high value homes in areas with long foreclosure timelines, HousingPulse respondents reported.
The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.