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20% of Home Sales Were Made Up of Foreclosures in Third Quarter

Not surprisingly, with the way the economy has been lately, 20% of all houses sold on the US market during the third quarter were previously foreclosed homes, according to a spokesperson for RealtyTrac. The good news is that 20% is a significant improvement when compared to the 30% rate recorded in 2010.

However, 20% is still not good if you look at earlier periods in which the economy was stronger, showing 5% of all residential sales being foreclosures. The hope is that the trend will continue and in the coming years we will see a constant decrease in the percentage of foreclosure sales on homes.

The total number of distressed properties that were bought during the third quarter, lower by 11% from the second quarter and even 5% lower than the third quarter last year, was 221,536. Daren Blomquist who is a spokesman for Realty Trac stated he believes the reason for the decline is that less houses are actually making it to the foreclosure pipelines.

Because of the accusations made against banks since the housing market became volatile, it appears they are using much more caution to be sure they have not misfiled or mishandled and paper work when selling a foreclosed home. In addition, banks are practicing more diligence where statements with little to no facts are being made. This almost certainly came after the robo-signing scandal that occurred recently.

There seems to be a reduction in “supplies” as the number of bank owned properties being placed on the market has slowed significantly as a result of issues with processing. Because of this there has been of a delay in sales of foreclosed homes by almost 200 days in many cases. That delay had gone up a bit from 172 days in the same quarter reported in 2010.

It also seems that banks have been holding back homes they have for sale so as not to flood the housing market, causing an even greater effect of the cost of homes. If too many foreclosed homes are placed on the market at one time it could cause even more chaos to the housing market than we are already seeing. For this reason many banks have gotten on board with slowing things down a bit.

The housing market is different in each part of the country but one thing seems to be a constant and that is that foreclosed homes are selling less frequently than in past quarters and recent years. What is a buyer’s market at the moment could slowly change to a seller’s market in the next several years. It is believed that this could definitely impact the economy in a positive way.

Only time will tell and we must await data for the 2010 year but we can cross our fingers and hope for the best. Most people would like to see a much more significant increase in the housing markets stability but for now the lower percentage of foreclosed homes is at least a glimmer of hope in an otherwise gloomy area.

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