Prescott area foreclosed home sales are on the rise

Foreclosures seem to be all over the news these days and it is easy to see why.  At one time foreclosures used to be the exception in the Prescott area, now they are driving home prices down just like the rest of the country.

In the last 6 months, 120 foreclosed (bank-owned) homes sold in the Prescott area, compared to only 23 that sold in the same period last year.

This compares to 1185 total homes sold during the last 6 months of last year and 1068 this year. So while total home sales dropped by 10%, bank-owned home sales increased by a staggering 421%. 

There are currently 167 homes on market that are bank-owned which is only about 6% of the total inventory of 2880 homes for sale. However, 11% of the sales during the last 6 months were bank-owned properties; about 2 times their fare share. This is not nearly as bad as the Phoenix market where nearly 50% of the homes that sold in the October and November were bank-owned, although they only made up 20% of the single family listings. (12/3  12 News).

Bank-owned homes are selling much faster than traditional sales as well. The average days on market (DOM) for bank-owned homes is 91 days, compared to 214 days for traditional sales. This is probably due to low prices that banks are willing to sell for. The average sales price per square foot of bankowned homes was $105 compared to $144 for traditional sales. 

Banks are getting about 96% of their asking price of $109 /sqft compared to homeowners who are only getting about 81% of the $177 / sqft they are asking for.

The pricing disparity between bank-owned homes and traditional homes is causing many buyers who are not willing to buy foreclosed homes to wait for homeowners to bring their price down further.

Some buyers, such as California investor, Bob Coan, do not like dealing with banks, but don’t want to pay retail either. When homeowners get their pricing more in line with what the banks are selling for, I willl be more inclined to buy, says Coan who invests in several locations nationwide and is currently looking at the Prescott market to expand into.

Buyers are certainly in the driver’s seat though, with almost 17 months of inventory on the market for traditional sales and a little over 8 months of bank-owned properties.

For more information about the Prescott REO and foreclosure market, contact Patrick Schutte, Certified Foreclosure Specialist