The number of area single-family homes in foreclosure dropped this year from 2012, while sales of foreclosed properties increased.
“If that continues to be a long-term trend, I think it is a positive effect on the market,” said Rodney Shine, team leader with Shine Team Realtors. “The banks that put those on the market aren’t in the business of holding on to the property.”
Instead, banks try to sell the property for their asking prices without additional costs to them, Shine said. A home Shine recently sold was placed in foreclosure June 1 at an asking price of $112,000. When he sold it this month, the price was $87,900.
If many properties are sold below cost, the market and residential property values can be affected, especially in a neighborhood or an area with multiple homes, Shine said.
According to a report from the Fort Hood Area Association of Realtors, about 74 active foreclosures occurred in November in this market, which stretches from Nolanville to Lampasas and from Gatesville to Florence.
In November 2012, 143 homes were listed as active foreclosures, which was about 10 percent of homes for sale.
“If you go back and look at the history, even when the market was doing good, we would have a 10 percent foreclosure rate,” said Jose Segarra, a spokesman for the Realtors association and an agent with Exit Realty.
Foreclosed homes have made up a little more than 4 percent of the market for most of 2013 with one month — March — reaching about 8.5 percent, the association’s report stated.
Sales of foreclosed homes in November were 46, which is almost twice the number in November 2012, when 22 foreclosed homes were sold.
Segarra credited several changes in the housing market for the drop in foreclosures.
“A lot of times people would leave and let their homes go into foreclosures,” he said.
If soldiers received orders and couldn’t sell their homes for a profit, they would let it be foreclosed and affect their credit, Segarra said.
This method of relieving themselves of their former property has decreased as prices for mortgages have dropped, but rental prices have increased or stayed the same, he said. While the return on the investment of owning a home also decreased, interest payments are still generally less than people can charge for rent.
“If you rent it out for several years, and the market catches up, they can sell it for a profit,” Segarra said. “They are saying, ‘Hey, I can make $200 off of this instead of ruining credit.’”
Homebuyers also are more responsible, Segarra said. As regulations for purchasing a house increased, so did homeowners’ responsibility. Homeowners are watching their credit scores more closely, because it has a larger impact on buying future real estate.
“A lot of the people that rent right now are the people that could have bought a house before, but they can’t now, they have to rent,” Segarra said about increased credit rating requirements to purchase homes.
Banks and lending organizations also stopped holding on to the properties, Segarra said. They learned how to deal with the inventory of homes going into loan default.
The banks’ inventory is a concern those operating in the real estate market should watch out for, Shine said.
Sometimes, banks will have a “shadow inventory” that they will place on the market all at once, Shine said. “Last year we were coming out the (housing) bubble, and the banks were holding on to them,” Segarra said.
While Shine had no reason to believe this is happening in Central Texas, many reduced-rate properties hitting the market at once can hurt homes sales.
“Not having them out there is great for the market in the short run,” Shine said. “When they do come on, there is an influx that can (decrease sales).”
While foreclosures can sometimes be cheaper, often there is no room for negotiations and repairs are generally done by the buyer, Shine said.
“They want to get it to a price where it wants to sell as is. On these foreclosure homes, you don’t get the benefits as you would in normal negotiations — repairs and what not.”