There were a total of 550 home sales in the St Louis 5-County core market during the 12-month period ended August 31, 2021, a decline of over 90 percent (90.5%) from the same period 10 years earlier. As the chart below (available exclusively from MORE, REALTORS®) illustrates, the St Louis distressed home sales 12-month trend peaked in May 2013 with 6,078 distressed home sales in the prior 12-month period and has fallen to just 550 distressed home sales for the 12-month period ended August 31, 2021. For the purposes of this report, distressed home sales include the sale of homes previously foreclosed on and being sold by banks or a government entity (such as FHA/VA) and short sales. Given that there has been a foreclosure moratorium in place for several months during the past year it’s not surprising the current trend is down but as the chart shows, the trend has been steadily downward since late 2013.
As I reported a couple of days ago, home sales (non-distressed) in St Louis were up around 8% in 2020 verses 2019 however, distressed home sales were down 25% in 2020 from the year before. For several months of 2020, there were moratoriums on foreclosures which would lower the number of distressed sales and are no doubt largely responsible for the decline in sales. For the sake of this report, “distressed” sales include foreclosures, short sales, and property owned by banks or the government.
During 2020, there were 894 sales of distressed homes, down 25% from 2019 when there were 1,191 sales. The median price of distressed homes sold during 2020 was $71,788 an increase of nearly 14% from 2019 when the median price was $63,000. There are currently 54 active listings of distressed homes representing a one-month supply.
Thanks to a booming economy and strong housing market, distressed home sales in the St Louis Metro Area declined by nearly 25 percent (23.42%) in the 12-month period ended January 31, 2020 from the prior 12-month period. As our exclusive, STL Market Report below shows, there were 1,887 distressed home sales (foreclosures, REO’s and short sales)in the most recent 12-month period compared with 2,464 in the prior 12-month period. The median home price of the distressed homes sold declined 1.79% during the same period, from a median price of $56,000 in the prior period to $55,000 in the most recent period.
St Louis is the top marketing for flipping homes, according to an article published yesterday on Realtor.com. It’s not all just flipping activity however in the article a very notable and credible St Louis industry source (unabashed self-promotion) stated that “flipping is more common in homes in the $175,000-plus range, while many of those listed for $125,000 and less are being turned into rentals, says Norman.”
The Realtor.com article gave an overview of the market data I produced for them so I wanted to share the market data behind the overview.
St Louis Neighborhoods With Large Investor Presence:
63137 Zip Code Area (Bellefontaine Neighbors/Glasgow Village) – 43.5% of housing units are investor-owned
63135 Zip Code Area (Ferguson) – 39.2% of housing units are investor-owned
63033 Zip Code Area (Florissant Area) – 21.8% of housing units are investor-owned
As the interest in investing in real estate in St Louis continues to increase, whether to buy, fix and flip or to buy and hold for rental, the number of opportunities to do so continues to decline. The primary source of “deals” for investors is typically “distressed” sales; property that has been foreclosed on and being resold, short sales or property in poor condition needing work. However, as our chart for St Louis MSA below reveals, the number of distressed home sales in St Louis has been steadily declining over the past 5 years.
The chart shows both the number of distressed sales for each month (the pink line) as well as the 12-month trend (green line) and both are on the decline. During the month of July 2018, there were 187 distressed home sales in St Louis, down 14% from 217 the month before and down 31% from last July when there were 272 distressed homes sold. For the 12-month period ended July 31, 2018, there were 2,787 distressed home sales, down 30% from the prior 12-month period when there were 3,965 distressed homes sold in the St Louis MSA.
Distressed home sales, foreclosures, bank and government-owned homes and short sales, continue to decline in St Louis as the economy and housing market continue to improve. The chart below illustrates this downward trend as, for each monthly data point, it shows the total number of distressed home sales in the 5-county core St Louis market for the prior 12-months. Plotting out the prior 12-month activity is a great way to spot trends and changes in the market. As the chart shows, for the 12-month period ending last month, November 2017, there were 1,484 distressed home sales, down over 34% from December 2015 when there were 2,263 distressed home sales during the prior 12 months.
St Louis 5-County Core Market – Distressed Home Sales- Prior 12-Month Period Monthly For Last 24 Months
(click on chart for live data)
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St Louis flipped homes accounted for 6.6% of home sales in the St Louis MSA during the 3rd quarter of 2017, the lowest level since the 3rd quarter of 2016 when flips made up 6.3% of the St Louis home sales. For the purposes of this report, a “flip” was defined as a property that was sold in an arms-length sale for the second time within a 12-month period.
Slow times are good flip times…
As the table below shows, with very few exceptions, for the 17 year period covered in the table, home flips have accounted for a larger percentage of the overall home sales in St Louis during the slow-selling seasons, the 1st and 4th quarters. This makes sense as lenders are more apt to make deals toward the end of the year to get foreclosures off the books before closing out the year.
Opportunities to flip homes in St Louis on the decline…
As our chart below the table shows, the number of distressed home sales (foreclosures, short sales, and bank-owned property) in the St Louis area has steadily declined during the past 2 years as the economy, including the housing market, continues to improve.
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Home sales in the city and county of St Louis this year have pretty consistently, from month to month, been at a pace roughly 5 percent higher than at the same time last year. As our chart below illustrates, we began this year with 747 homes sold (not including distressed sales) in St Louis city and county, an increase of 5.2% from January 2016 when there were 710 homes sold. As of the end of October, there were 12,824 homes sold this year, an increase of 5.6% from the same time last year when there were 12,145 in the city and county of St Louis.
Home Prices Rise Modestly In St Louis City & County…
As the chart and tables, below show, the price per foot that homes sold for (the most accurate way to compare prices) this year has with the exception of May, been higher than for the same period last year. For the past couple of months, the price per foot has been either side of 3% higher than the corresponding period last year. As the YTD table for 2017 shows, the actual median price of homes sold this year, in the city and county of St Louis, has been $194,900, an increase of about 1% from last year’s median price of $192,900 for the same period.
Plenty of Homes For Sale in St Louis City and County…
Referring to the tables below again, you can see that, as of today, there is a 6.57 month supply of homes for sale (non-distressed) in St Louis city and county, putting the market into buyers market territory somewhat, and an increase of a little over 7 percent from the same time last year when there was a 6.13 month supply of homes for sale.
Why You SHOULD Be A Data Nerd, or at least, Pick One For An Agent!
Ok, I’ll admit it…I’m a data nerd! I love analyzing the real estate market and trends. I could sit for hours studying the market, computing prices, and spotting trends. I also love teaching our agents to do the same as well as sharing the results I glean from the data with our agents, to help them stay informed, on top of the market and able to better serve their clients. I also love educating consumers about the real estate market to equip them to make smart decisions when buying or selling real estate, or when choosing an agent.
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Why is this so important?GIGO! That’s why!
What in the world is GIGO? A computer science term which means, to quote Wikipedia: “(GIGO) is where flawed, or nonsense input data produces nonsense output or “garbage…..The principle also applies more generally to all analysis and logic, in that arguments are unsound if their premises are flawed.”
So, in a nutshell, if you, or your real estate agent is getting “flawed” or “nonsense” data, then the output, or result, will be “garbage”. Considering that, for most normal folks, buying or selling a home is often the largest transaction they make, it’s worth avoiding making decisions about that transaction based on bad info.
This is why we work so hard at delivering the best St Louis area home sales, and prices data. I’ll now give you a couple of quick examples of how abundant bad data is out there and how it may differ from what I have here.
From a very popular national real estate search site: “The median home value in Saint Louis is $131,300. Saint Louis home values have gone up 18.3% over the past year“
From a website that gives “neighborhood information”, the median home price in St Louis is currently $136,192.
From a trade association in the real estate industry…”While the median sales price (in the city and county of St Louis) increased 7 percent from $160,000 in October 2016 to $171,000 this year”
Get the idea? Even what appears to be, or may, in fact, be, very credible sources of home price and market data for St Louis, can be very wrong. None of this is intentional, but, instead, a result of there being “too much” information available today and, without going through some effort to sort through it, it can easily be GIGO data.
How does the GIGOdata happen?
Much of the home price data you see quotee for St Louis is for the St Louis MSA, which includes 17 counties, 9 in Missouri and 8 in Illinois.
We clearly identify what data we are reporting, such as, in this article, data for the City and County of St Louis.
Most of the data sources are probably reporting data which includes distressed home sales (foreclosures, short sales, etc) which can, in some areas where there are a lot of them, such as the city of St Louis, dramatically affect home prices.
We often filter out distressed sales, particularly when reporting data for an area where they can impact the data significantly (like in the city and county of St Louis) and then clearly identify what the data represents..
“Home prices” is generally the term used, but often times, the data reported actually combines condo prices with home prices. Condo’s sell for different prices, and appreciate and different rates, than homes, so this can skew the data as well. If we report “home prices” we have filtered out condo sales.
In addition to all of the above, there are many other reasons why it is hard to find accurate and timely home price and sales information for the St Louis area. The large number of municipalities St Louis county is chopped up into is part of it, as is the fact that the city of St Louis is not within St Louis County and that the REALTOR MLS here requires subdivision names to be entered manually, giving rise to errors and difficulty in getting good subdivision level home price and sales data.
This is why at our firm, MORE, REALTORS, we have worked so hard and spent so much time and money developing our own proprietary softwareto assure our agents, and their clients, have access to, the most accurate and timely, St Louis area home price and sales data possible.
St Louis City/County YTD Home Sales & Price Per Foot – (chart)
Home flipping accounted for 7.3 percent of all the home sales in the St Louis MSA during the 2nd quarter of this year according to a report released today by Attom Data Solutions. This is a decrease of 15% from the prior quarter when 8.6% of the homes sold were flips and is an increase of 10.6% from a year ago when 6.6% of the homes sold in St Louis were flips, according to the report. For the purposes of this report, a “flip” was defined as a property that was sold in an arms-length sale for the second time within a 12-month period.
St Louis house flipping profit margins…
During the second quarter of 2017, the median purchase price of houses that were flipped was $75,000 and the median resale price, 163 days later on average, was $129,900 for a gross profit margin of $54,900. Before you get too excited though, remember this is just the gross margin between the price paid and the price resold at. The actual net profit would be much lower as there would be costs related to the acquisition and sale of the property as well as rehab/repair costs and carrying costs, none of which is available publicly, so we can just talk about gross margins here.
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The housing bubble that led to the housing bubble burst in 2008 started a decline in the value of homes, including those in St Louis, for the following 3 to 4 years. This resulted in a much larger number of homeowners facing financial struggles including late payments, foreclosures, short sales, bankruptcy and the like, than was the historic norm. As a result, while maybe not a new concept but certainly one that had been more obscure in the past, credit repair, became a lucrative and growing business as consumers sought to repair the damage done and position themselves to buy a home.
In St Louis, there are many companies offering credit repair services, with many making some pretty enticing sounding claims with regard to removal of negative items from your credit, improving your credit score in a short time period and so on. While there are reputable companies out there doing a good job for St Louis homebuyers looking to improve their credit no doubt, there are also some that are probably not doing much more for the consumer than they could easily do on their own or, worse yet, perhaps very little at all for the fee paid.
How do you find a good credit repair company in St Louis?
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Ok, I’ll admit it, I know I’m sort of a big data nerd and not everyone is, so I may be in the minority when it comes to the attention I give, and time I devote, to market data, stats, trends and the like. However, while not everyone wants to study this stuff, anyone in the market to buy or sell real estate either needs to be up to date on what is going on in the market in terms of price (and the other stuff I mentioned) or be represented by a real estate agent that is. Otherwise, without this information or, worse yet, with bad information, home buyers and sellers can make some really bad decisions.
There is a lot of “bad” data out there and it can hurt you!
When I started in the real estate business, way back in 1979 and the age of 18, it was very hard to get much data on home prices, sales, etc, heck, it wasn’t even easy to find out what was listed for sale. Today, largely a result of the internet, things are much different. There is plenty of data and information available to home buyers and sellers today and it’s easy to find. The hard part today isn’t getting the data and information, it’s getting good, accurate and relevant data and information. You don’t have to spend much time online, whether on social media sites, real estate websites or even “news” sites, to discover all sorts of inaccurate, incomplete, dated, useless and conflicting data and information. For example, in the past week, I saw reports, even from people in the real estate profession in St Louis, indicating home prices declined last month from a year ago to the tune of about 3% or so, but I don’t believe that is the case. Bear with me and keep reading and you will see why I say this as well as what I think is accurate with regard to St Louis home prices.
Usually the source means well and the data is believed to be accurate, but….
With regard to real estate, I think most of the data published on real estate sites, social media sites, etc by real estate agents as well as others in the industry, is believed by the person putting it out there to be accurate, the problem is it often is not. The problem is, without really digging into the source of the data, or examining what criteria was used to compile the data or report, people are often passing along information they are just assuming to be accurate but often is not.
So, where can you find good, accurate and relevant information and data on the St Louis real estate market?
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Home flipping accounted for 8.6 percent of all the home sales in the St Louis MSA during the 1st quarter of this year according to a report released today by Attom Data Solutions. This is an increase of 14.7% from the prior quarter when 7.5% of the homes sold were flips and is an increase of 6.2% from a year ago when 8.1% of the homes sold in St Louis were flips, according to the report. For the purposes of this report, a “flip” was defined as a property that was sold in an arms-length sale for the second time within a 12-month period.
St Louis house flipping profit margins…
During the first quarter of 2017, the median purchase price of houses that were flipped was $75,000 and the median resale price, 158 days later on average, was $129,400 for a gross profit margin of $54,400. Before you get too excited though, remember this is just the gross margin between the price paid and the price resold at. The actual net profit would be much lower as there would be costs related to the acquisition and sale of the property as well as rehab/repair costs and carrying costs, none of which is available publicly, so we can just talk about gross margins here.
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According to a report just released by Corelogic, the 30-59 day mortgage delinquency rate in March (the most recent month reported) fell to just 1.7%, the lowest level since January 2000. The “seriously delinquency” rate (30+ days late) fell to 4.4% in March, the lowest level sine November 2007, according to Corelogic.
In addition, the “transition rates” all improved as well from a year ago. Transition rates show which way the borrowers are moving, from slightly delinquent to more delinquent, or from slightly delinquent to current for example. Below are the transition rates for March 2017, according to the Corelogic report:
Borrowers going from current to 30 days late – 0.6% for March 2017, down from 0.7% in March 2016
Borrowers going from 30 days late to 60 days late – 11.6% for March 2017, down from 13.2% in March 2016
Borrowers going from 60 days late to 90 days late – 20.8% for March 2017, down from 23.1% in March 2016
All of this is good news for the real estate industry as the trends are positive and are is a good “leading indicator” of what is to come. As mortgage delinquencies decrease, foreclosures, short sales and other distressed home sales decline, putting less downward pricing pressure on the housing market and providing sustainability to the improving housing market.
Speaking of mortgages, if you are considering refinancing, want to know what current rates and terms are, or would like to get pre-approved for a mortgage, I would highly recommend speaking with Ryan Derryberry, a mortgage loan professional with Movement Mortgage. Ryan is a great guy, is honest and knows his stuff. Movement is a great company, founded and operated on great principals and offer some mortgage products you won’t find anywhere else….More information on Ryan, including his contact info, can be found here.
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When I first got in the real estate business in 1979 buying foreclosed property was something pretty well limited to speculators at the time. People like the broker I started with, and what I became a few years later, that bought property for cash, as-is generally to fix up and resell. Foreclosures, and how to buy them, were a mystery at the time, not only to the general public but to many in the real estate business as well. This is what gave us speculators an edge…we knew how to get the information on foreclosures and how the process worked. Ditto for tax sales and sheriff sales and short sales were something that didn’t even exist at the time.
Today, it’s all different however. Thanks largely to the internet and reality TV, it seems everyone knows about foreclosures, tax sales, and just about every other way of finding and buying distressed property. While this is good for sellers and for listing agents, it’s made it tough on investors and other buyers looking to take advantage of the opportunity offered through distressed sales. The result has been a highly competitive market and higher prices. This was evidenced by the sales data from last year. As the tables below show, most of the distressed homes sold during 2016 sold for a median of 100% of the current list price at the time of sale.
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The number of distressed home salesin St Louis has been on the decline while distressed home prices have remained relatively flat. For the purposes herein, a “distressed” home sale includes short sales, foreclosures, bank-owned and government-owned homes. Thus far, as the chart below illustrates, there have been 2,170 distressed home sales in the St Louis 5-County Core market (the City of St Louis and Counties of St Louis, St Charles, Jefferson and Franklin) this year which is a decline of 23% from last year when there were 2,871 distressed homes sold and down 38.4% from 2014when there were 3,533 distressed home sales in St Louis. The median price of distressed homes sold in St Louis has not fluctuated much over the past 3 years however, with the median price of distressed sales in 2014 at $61,750, then decreased to $60,000 in 2015 then went up to $62,500 this year.
As the table below the chart shows, currently there are 394 active listings of distressed homes at a median list price of $64,950 which, based upon current sales trends, is a supply of just under 3 months.
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A report recently released by ATTOM Data Solutions revealed shows distressed home sales in the U.S. (foreclosures, short sales and bank-owned real estate) accounted for just 12.9 percent of the home and condo sales in the U.S. during the 3rd quarter of this year which is down from 15 percent during the 2nd quarter and down from 15.9 percent a year before. This is the lowest level for distressed home sales since the 3rd quarter of 2007, according to the report. Distressed home sales peaked during the first quarter of 2009 when they accounted for 43.9 percent of all home and condo sales in the U.S.
St Louis Distressed Home Sales:
St Louis distressed home sales have followed suit and are on the decline as well. As the chart below shows, there were 167 distressed home sales last month, down 17 percent from a year ago when there were 207 distressed homes sold during the same period. However, if look at the past 3 months, there were 561 distressed homes sold in St Louis, down just 6.7 percent from the same period a year ago when there were 601 distressed home sales.
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There were 184 distressed homes (short-sales and foreclosures) sold in St Louis (the 5-county core market) during the month of August, an increase of 44 percent from July when there were just 128 distressed home sales. As the chart below shows, distressed home sales in August 2016 declined 5 percent from August 2015 when there were 194 distressed homes sold in St Louis.
As the table below shows, the median price of distressed homes sold over the past two years was $61,000 and for the most recent month, August 2016, the median price was $$65,050.
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There were 2,290 St Louis Existing Homes Sold in April (in the 5-county core market), an increase of 1.0 percentfrom April 2015 when there were 2,265 homes sold. The median home price of homes in the St Louis 5-county core market (city of St Louis and counties of St Louis, St Charles, Franklin and Jefferson) during April 2016 was $173,850, an increase of 4.4 percent from April 2015 when the median price of existing homes sold was $166,500.
For the combined markets of the City of St Louis and the County of St Louis, there were 1,241 existing single family homes sold during April 2016, an increase of 9.6% from the prior year and the median home price of homes sold during the month was $158,250, an increase of less than 1% from the prior year.
Distressed home sales still account for over 1 of every 10 home sales….
During the month of April in the St Louis core market, there were 243 distressed home sales (foreclosures, short sales, bank-owned property) which is 10.6% of the total home sales during the month. The median sales price of these distressed sales in April 2016 was $51,780, a decline of 1.0% from a year ago when distressed homes sold for a median price of $52,314.
St Louis home prices in April, on non-distressed existing home sales, rose just 1 percent from year ago…
In spite of some recent news reports boasting much bigger increases in home prices (as much as 17%) based upon the data I have compiled, courtesy of MARIS, the REALTOR regional MLS, the increase in home prices is nowhere near that. If we remove distressed home sales from the data, and look at what the “normal” housing market looks like, in April 2016 there were 2,045 homes sold, an increase of 5% from a year ago when there were 1,947 non-distressed single-family home sales in the St Louis 5-county core market. The median price of these home sales in April was $185,000, an increase of 1.0% from a year ago when the median home price for non-distressed single-family home sales in the St Louis 5-county core market was $183,000.
Why a 17% increase in home prices would not be good and 1% is better…
If St Louis home prices had in fact, as reported by some of the media, increased in the past year by as much as 17% that would mean home prices rose about 17 times more than the rate of inflation. As the table below from the US Labor Bureau shows, the St Louis rate of inflation from the 4th quarter of 2014 to the 4th quarter of 2015 was 0% and, the best I can tell, the most recent rate only indicates about a 1% rate of inflation. Therefore, a 1% increase in home prices in the past year, as I have reported above, is consistent with the current rate of inflation and is a good thing for the long term health of the housing market as we don’t want home prices to rise significantly faster than inflation. How do I know this? Well, as the chart below shows, where I have graphed historically, there has definitely been a relationship between home prices and CPI with the two normally rising at a fairly consistent rate with the big exception being in the early 2000’s. As the chart shows, being in early 2000, home prices began rising at a rate higher than the inflation rate eventually reaching the tipping point in the 4th quarter of 2007 when home prices had increased 42% during the prior 7 year period and the rate of inflation only 20%. We all know what happened next, the housing bubble burst and home prices plummeted back to where they should have been. So, during the period that lead to the housing bubble, home prices were, on average, just increasing just a little over double the rate of inflation and look what happened. Now do you see why I say a 17% increase in home prices in the past year would be bad and the actual 1% it was is good?
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A recent article by STL Today indicated that home affordability in St Louis had fallen, specifically noting that affordability in St Louis County had fallen below historic “norms”. As is always the case with stats, it depends upon which data you are taking into account and the accuracy of the data. I decided to take a look at the data and see if my data showed the same result as the STL Today article.
Affordability is UP in St Louis county, not DOWN…
As the table below shows, home affordability in St Louis county has actually increasedin the past year, not decreased as reported in the aforementioned article. For the purposes of my analysis, I used home sales data for “non-distressed” sales only, so not including foreclosures or short sales, to get a more accurate picture of the true market.
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Distressed home sales in St Louis during the month of October 2015 accounted for about 11.6 percent of all home sales during the month, a decline of about 50 percent from a year ago when St Louis distressed home sales accounted for 23 percent of the all home sales, according to the latest data just released by RealtyTrac. Distressed home sales would include foreclosures, REO’s (homes that have been foreclosed upon and now being sold by a bank or other lender) and short sales.
As the table below shows, the St Louis metro area saw a decline in all types of distressed home sales in October from the month before, however some of the counties in the area saw an increase such as the city of St Louis that saw distressed home sales increase from 20.9% in September 2015 to 25.3% in October.
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Distressed Home Sales accounted for just 13 percent of St Louis home sales thus far in 2015, a decline of 37.6 percent from two years ago when over 1 in every 5 (20.83%) St Louis home sales was a short sale or foreclosure. As the table below shows, through the end of October this year, there have been just 475 short sales in the 5-county core St Louis real estate market, or just under 2 percent of total home sales, and just 2,713 sales of bank and government-owned homes, just over 11 percent of total home sales.
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St Louis distressed home sales share of the St Louis real estate market continues to decline minimizing the negative effect on home prices caused by distressed home sales. In August, distressed home sales, primarily consisting of foreclosures and REO’s (bank owned properties) at this point as short sales have fallen to the point to be statistically insignificant, accounted for just 6 percent of the overall home sales in the St Louis metro area, according to a report just released this morning by RealtyTrac. This is a decline of over 50 percent (56.3%) from a year ago when distressed home sales accounted for 13.7 percent of total home sales in St Louis.
St Louis county saw the biggest decline in the distressed home sales share of the market in the past year of the counties that make up the core of our St Louis real estate market and, as the table below shows, the city of St Louis saw the smallest decline and is the only one on the list where distressed home sales share of the market is in the double digits.
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There were 123,546 St Louis homeowners with negative equity, or in a seriously underwater condition on their mortgage meaning they owe more than the current value of their home, in the St Louis MSA during the 2nd quarter of 2015 according to the most recent data by RealtyTrac. This works out to 17 percent of all St Louis metro area homeowners with a mortgage being underwater on their mortgage which is an improvement from 21 percent just 2 quarters prior.
As the table below shows, for the immediate St Louis, MO area, the city of St Louis had the highest rate of underwater homeowners at 1 out of every 4 homeowners with a mortgage and St Charles county had the lowest percentage at 7%.
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Over two million (2.2 million) boomerang buyers may re-enter the housing market as home buyers over the next five years as their credit recovers to the point where they can obtain a home mortgage again, according to a study just released by Trans Union. According to the study, 700,000 of those buyers will be eligible for mortgages this year alone. Boomerang buyers are described as homeowners who lost their home in foreclosure, did a short sale, deed in lieu or had some other serious negative credit action with regard to their home mortgage, such as becoming 60 days or more delinquent.
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Distressed home sales (foreclosures, REO’s and short sales) made up 13.5 percent of the home sales in the U.S. in February, 2015, a decline of 18% from a year ago when the rate was 16.5 percent and is a decline of 5.6% from January when the rate was 14.3%, according to a report just released by Corelogic. The rate of distressed home sales in February 2015 marks the lowest rate for the month of February since February 2008, according to the report.
REO Sales down almost two-thirds from peak
During the peak, January 2009, distressed home sales accounted for 32.4 percent of al home sales with REO sales making up 27.9% of that share. In February, 2015, REO sales accounted for 9.7 percent of all home sales, a decline of nearly two-thirds (65.23%).
Short Sales down only slightly
Quite different than the figures for REO sales, short sales accounted for 4.5% of all home sales back in January 2009 and still accounted for 3.8% of them in February 2015, for a decline of just 15.6% percent.
Still far from “normal”
Even with the declines, we are a far way from “normal”….prior to the real estate market crisis, distressed home sales made accounted for just about 2% of home sales so we still have a long way to go.
Michigan is the king of distress
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Between 2006 and 2014 nearly 9.3 million homeowners in the U.S. were either foreclosed on, did a deed of lieu of foreclosures, or did a short sale of their home, according to a recent report by the National Association of REALTORS (NAR). Here in Missouri, there were 158,000 foreclosures or distressed sales during that same period.
According to the NAR report titled “Return Buyers” Many Already Here, Many More to Come”, almost one million (950,000) of the 9.3 million people that lost their home, or did a distressed sale, have already likely purchased a home again, however an additional 1.5 million return-buyers will likely purchase a home in the next five years. In Missouri, NAR estimates that 21,000 of the 158,000 homeowners that lost their homes in foreclosure, did a deed in lieu or short-sold their home have already purchased another home, however predicts that there are 30,000 more in Missouri that will be a return buyer from now until 2023.
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There were 119,936 St Louis homeowners with negative equity, or in a seriously underwater condition on their mortgage meaning they owe more than the current value of their home, in the St Louis MSA during the 4th quarter of 2014 which is a 21% improvement from the prior quarter when there were 152,025 St Louis homeowners seriously underwater, according to a report just released today by RealtyTrac.
As the table below shows, for the immediate St Louis, MO area, the city and county of St Louis had the highest percentage of underwater homeowners at 22% and St Charles county had the lowest percentage at 6%.
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The number of St Louis Homeowners with negative equity (or underwater) during the third quarter of 2014 hit the lowest level since Corelogic began tracking this data in the 3rd quarter of 2009. During the quarter, 8.43% of St Louis homeowners with a mortgage were underwater or in a negative equity position meaning their mortgage balance exceed the current value of their home, according to the latest data from Corelogic.
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As a result of the real estate market crash in 2008 and the subsequent downturn in the economy, many homeowners with prior stellar payment records on their mortgages ended up losing their homes in foreclosure or being forced to do a short sale to get out from under it. Most of these former homeowners then became renters but have the desire to buy a home again once back on their feet. However, depending upon just how severely their credit was impacted as well as whether they had a foreclosure, short sale or bankruptcy, they may have to wait as long as 7 years to obtain a home loan again. However, thanks to an FHA program called “Back to Work”, which, surprisingly, has received little attention, there is hope for these homeowners including the opportunity to obtain a home loan again without the normal waiting period if their problems were related to a job loss and they meet certain criteria.
The Back to Workprogram allows borrowers that may be otherwise ineligible for an FHA-insured mortgage due to FHA’s waiting period for bankruptcies, foreclosures, deeds-in-lieu, and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, to be eligible for an FHA-insured mortgage if the borrower meets certain guidelines, which include:
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St Louis Distressed Home Sales ticked up slightly in November 2014 rom October but declined over thirty percent (30.8%) from November 2013, according to data just released by RealtyTrac. As the table below shows, all the counties in the St Louis core market except one saw an increase in distressed home sales in November from the month before and all saw a decline in November from a year ago.
On a national level, distressed home sales in November 2014 accounted for 12.6% of all home sales, down from 13.7% in October and from 14.8% in November 2013.
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