My name is Rod Hicks with
Weichert Realtors Access Realty
Give me a call 205 222 3500 when you selling
or buying a home!!!!!!!
Thursday, May 17, 2012
This article is by Dawn Kent of the Birmingham News
BIRMINGHAM, Alabama -- Home sales are rising across metro Birmingham as the summer buying season nears, but there's a shadow lurking over the market as sales of foreclosed properties are also climbing.
Already this year, sales of such properties, which drag down average prices, are up in nearly every part of the metro area compared to last year. Nationwide, the numbers of foreclosure-related sales are expected to increase in 2012 as lenders get more aggressive in unloading their distressed assets at deep discounts.
For surrounding homeowners, the impact of foreclosures depends on a variety of factors such as the number of foreclosed homes in a neighborhood and those properties' conditions.
Nationwide, according to the California-based mortgage researcher RealtyTrac, foreclosure properties sold at an average discount of 32.6 percent versus non-foreclosures in 2011. In Alabama, that number was 29 percent.
Across metro Birmingham, the average price for a home -- including foreclosures and market-price sales -- has fallen 13.6 percent since the local market's peak in 2006. That year, the average price was $198,340 and by last year it was $171,275. So far this year, average prices are even with last year.
So far in 2012, foreclosures are making up a substantial percentage of sales.
In the western region of the Birmingham area, which includes Bessemer, Ensley, Fairfield, Hueytown, McCalla, West End and other neighborhoods, foreclosure sales account for 61 percent of total home sales through the first four months of this year, up from 55 percent during all of 2011, according to data from the Birmingham Area Multiple Listing Service.
Even in the metro's southern region, with the affluent over-the-mountain communities and the fast-growing areas of Shelby County, foreclosure sales account for almost a quarter of all home sales so far this year, compared to 21 percent last year.
Overall, there have been 1,198 foreclosure sales in metro Birmingham in this year's first quarter, or 37.5 percent of all home sales. That's up from 33.5 percent during 2011.
But foreclosure sales, as well as their impact on the market, are very local, and not all communities are seeing a lot of them, said Brian Sparks, president of the Birmingham Association of Realtors.
For instance, in Mountain Brook, foreclosure sales account for 4.5 percent of all home sales from January 2011 to March 2012, he said. In the Hoover/Ross Bridge area, that number is 14.5 percent.
"There are some hard-hit areas that are bringing that overall number up, but it's very local and you really have to look at your market," said Sparks, of Ingram & Associates.
Additionally, Birmingham and Alabama have experienced just a fraction of the frenzied foreclosure activity -- and resulting discounted sales -- that have crippled markets in Florida, Arizona and Nevada.
But, Sparks said, foreclosed properties that are for sale do compete for buyers with non-foreclosures. They also can affect a home's appraisal, if there are a number of them in the immediate vicinity.
Data also vary based on the type of foreclosure sale.
RealtyTrac counts 3,830 foreclosure sales in Alabama during 2011, the latest data available. That's a 17.5 percent increase from the previous year that accounted for 13 percent of all home sales last year.
Nationwide, 2011 foreclosure sales totaled 907,138, dropping 2 percent from the previous year. That portion comprised 23 percent of all U.S. home sales for the year.
RealtyTrac says the easing of mortgage servicing gridlock will help pave the way for more foreclosures to complete the process and be sold.
Another trend expected this year is the rise of short sales, when a lender agrees to sell a home for less than what is owed on the property. This type of pre-foreclosure sale could actually help to lower the number of foreclosures this year by diverting distressed properties into short sales rather than the foreclosure process, said Daren Blomquist, vice president for RealtyTrac.
While short sales still represent a distressed sale where a homeowner is losing their home under duress, they are a more efficient way for the market to absorb these distressed properties. The properties are sold sooner than bank-owned foreclosures, for higher average prices, and typically without having a vacant property sit in disrepair for several months.
"The impact this trend will have on the market in the short term is more short sales will continue to weigh down overall home prices, although less than bank-owned foreclosures sales weigh down home prices," Blomquist said. "But in the long term the short sales are a necessary process that will help the market hit a reset button and get these distressed properties into the hands of homeowners who can afford them."
Through April of this year, 3,195 homes had been sold in metro Birmingham, a 17 percent increase from the first four months of 2011, according to the Realtors group. The year-to-date average sales price is $162,864, even with the year-ago period.
For the same time period, the average foreclosure price is $80,057, while the average non-foreclosure price is $212,348.
Local agents say they have noticed a substantial rise in activity in the market.
Birmingham area real estate analyst Tom Brander, through a partnership with the Alabama Center for Real Estate, has projected a 16.7 percent increase in overall unit sales for the year, compared to 2011.
The current projections are more optimistic because of improving unemployment.
Brander, who tracks monthly sales on his blog (tbrander.wordpress.com),says the price declines in the market are not necessarily due to foreclosure sales but because of a large inventory and buyers' drive to find a bargain.
The Birmingham market's inventory of homes has declined significantly, but it's still larger than it needs to be to achieve equilibrium.
"I think we're going to continue to see prices deteriorate at a lesser rate, but we're going to see sales volume go up," he said.
By the end of the year, he hopes to see an equilibrium in prices.
"I would expect the decline in prices to end around the end of the year," Brander said. "Prices will begin to level -- that doesn't mean a recovery in prices, but we hope we won't be losing any more value."