By Alan Johnson, Liz Moore and Associates
Welcome to the April 2012 update on foreclosure sales for the greater Williamsburg area housing market. A foreclosed property is also known as a foreclosure, an REO (which stands for real estate owned) property, or a bank owned property. The owner defaulted on the mortgage and the bank went through their foreclosure proceedings and took over ownership of the property. The banks sometimes set up separate companies to handle their foreclosed properties and they can take a long time to process those homes and get them back on the market. Therefore not every foreclosure property in the area will be on the market simultaneously. All foreclosed properties go through multiple stages before finally being listed for sale in the MLS.
Understanding the impact of foreclosed properties on local real estate values starts with a few basic statistics. Those stats are the number available for sale, the number which sell and some idea of how they affect prices. First consider the number of foreclosed properties for sale in our local area in Williamsburg. The table below shows the number of foreclosed properties listed for sale in the Williamsburg multiple listing service (MLS) for a recent search. 27 foreclosures out of a total active inventory of 1,020 homes is only 2.6% of available homes for sale. Since foreclosures derive from homes with mortgages and not just homes for sale, they should be measured as a percentage of all homes in the area with a mortgage. Those numbers are available from various web sites like Realtytrac.com
Foreclosure Inventory
Next let’s look at how many of those properties sell each month. The chart below shows the number of foreclosed homes that sold each month from the Williamsburg MLS since Jan 2010. In April there were only 4 foreclosure sales. That is 2 less than a year ago and 4 below the running 12 month average. There are many potential reasons we only had 4 sales in April. Closings could have been delayed, or the choices just might not be that good anymore, or inventory has decreased. We will just have to wait and see if there is a surge next month or if we have a new trend.
Foreclosure Sales
Next consider how those 4 foreclosed properties affected the market stats for the remaining sales of the month. With only 4 foreclosed properties (and a small but unknown number of short sales) there is no generalized effect on appraisals for the remaining non-distressed sales. If a foreclosure was used in an appraisal for a similar home in the same neighborhood then it might have an adverse affect but we do not see the major impacts in our overall housing market as do other areas of the country with a much higher foreclosure count.
- Foreclosure Sales Comparison
Removing the 4 foreclosed properties from the 82 total sales recorded in April caused the monthly median sale price to increase 4%. That makes the market look better and does affect how appraisers rate the overall market in their reports.
Finally here is my regular table showing the individual stats for each of the 4 sales mentioned above. If you are considering buying a distressed property, a simple guideline is to pay no more than 70% of the assessed value of the property. Whether you are an investor or an owner/occupant that will allow you to put about 10% back into the property and sell it either now or later and make back that 20%. However the neighborhood may not support a resale of the property at assessed value. Ensure you or your agent research recent sales in the area surrounding the subject property to determine what you think the sale price would be once the property is fully repaired.
Foreclosure Sale Prices
If you currently live in or are relocating to the greater Williamsburg area, I can provide the latest information on Williamsburg homes for sale including James City County housing and York County housing. Visit my blog on Williamsburg housing to learn more about home sale values, real estate trends, and the latest real estate market news. If you would like a complimentary estimate of real estate home values please call me anytime at 757-784-2875 or email me at alanjohnson@lizmoore.com.
I am a Williamsburg Realtor® with Liz Moore and Associates serving on the Liz Moore Military Team where we assist military families relocating to Fort Eustis to find that special Williamsburg property just for them. My primary concentration is listing homes for sale in Williamsburg, assisting clients looking for 55 housing in Williamsburg or James City County and helping investors locate bank owned properties for sale. Finally if you are considering entering the home building market, then visit our location in Monticello Woods where we are the exclusive representative of Wayne Harbin Builders, Inc.
