Market Insights: Distressed properties increasing
Real estate is local. When it comes to the trends of what is going on with distressed properties (those in the short sale or foreclosure processes), it is essential to utilize a magnifying glass and study each market in detail. The Front Range market saw an enormous wave of foreclosures in the mid 2000s; yet, in Summit County, the wave of distressed sales did not arrive until 2008, when a total of 160 properties received their Notice of Election and Demand, the first step a bank takes in the foreclosure process. In that same year, just 23 properties completed the foreclosure process with a Certificate of Purchase being issued, which means those 23 became bank-owned. Here is the data (timeshare properties excluded) on the wave of foreclosures in Summit County.
2008 – Start of the Wave
*160 properties received their Notice of Election and Demand.
*23 properties became bank-owned.
2009 – The Wave Grows
*190 properties received their Notice of Election and Demand.
*47 properties became bank-owned.
2010 – The Wave gets even bigger
*313 properties received their Notice of Election and Demand.
*104 properties became bank-owned.
2011 – ????
The above statistics are thanks to Maggie Dew of Stewart Title in Summit County, who provided this data and shared her knowledge with me. While meeting with her to prepare this article, we discussed distressed properties at length. We talked about what we could expect in 2011. We agreed that, at best, we can guess what might be around the corner; however, we are not able to predict the future. So armed with our magnifying glass and our intimate knowledge of distressed properties in Summit County, here is our guess: 2011 will see an increase in bank-owned properties on the market – possibly over 200.
For the purpose of perspective, let’s pull that magnifying glass back a bit. There are around 24,000 residential properties in Summit County (timeshares excluded). 200 bank-owned properties hitting the market is less than 1percent of the market. Overall, it is insignificant unless that bank-owned property is next door. It only takes one distressed property sale in your condo complex or in your neighborhood to put dramatic downward pressure on values. Why? Banks want their properties sold quickly. Banks have a tendency to put properties on the market for 15 to 30 percent below the market value. 124 Davenport Loop, Breckenridge, is a prime example.
This distressed property, a short sale, has been approved to be sold for $875,000, which works out to be $182 per sq. ft. That is 55 percent below the original asking price. This glorious six-bedroom home is a bargain.
If you have a property on the market, or are thinking of marketing your property, make sure your real estate professional is tracking every single distressed sale that could impact the value of your property.
Daniel Webster Johnson is a Broker Associate at Resort Brokers Real Estate in Breckenridge. He can be reached at (970) 393-3300 or Daniel@YourMountainBroker.com.
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