Foreclosures Sell at Biggest Discount Since 2005 as Demand Slumps

It is the last month of 2010 and about 3 years since the housing economy collapsed.  We are in full swing of a great recession and the housing market has not recovered.   I believe we are still in a downtrend with prices still sliding.  For those of you who have sat out the market that is a good thing because bank REOs are abundant and inventory will continue to grow.   That in turn will drive prices down into more affordable deals and an overall better value.

Bloomberg:

U.S. homes in the foreclosure process sold for about 32 percent less than non-distressed properties in the third quarter, the biggest discount in five years, as buyer demand slumped, according to RealtyTrac Inc.

The average discount for bank-owned real estate, residences in default or those scheduled for auction rose from 29 percent a year earlier, RealtyTrac said in a report today. A quarter of all U.S. transactions involved those types of homes, according to the Irvine, California-based data seller.

Sales of foreclosure properties plunged 31 percent as the end of a buyer tax credit reduced purchases overall, RealtyTrac said. The decline came before loan servicers including Bank of America Corp. and JPMorgan Chase & Co. halted some home seizures amid claims that employees processed thousands of documents without verifying them, a practice known as robo-signing.

Banks and foreclosures

A new hiccup for banks have come up in regards to how they have been handling their foreclosures and REOs. This video summarizes the issues.