This past week our listings saw an average of 1.9 showings each. This is consistent with recent weeks’ traffic patterns. Our office has seen some contracts come to fruition which is certainly a good sign. However, it is important that many of the contracts are coming from a very specific segment of the market: foreclosures.
Our office has been staying alive during this extremely difficult market partially through foreclosure sales. By the end of the year, we will have closed roughly 10-12 homes in the fourth quarter. I would estimate that 60-75% of those closings will involve a default/foreclosure situation. Thinking about these numbers, the ‘data-geek’ in me wanted to see how the overall market is being affected by foreclosures.
The Carolina MLS does not currently have an accurate method to track foreclosure sales. Therefore, those who deal in foreclosures have to use common MLS search terms to find them. It is not an exact science, but normally yields some reasonable results. That said, I performed my own foreclosure search to determine how that market is contributing to overall home sales.
The results that I found show that roughly 20% of all home sales in Mecklenburg County in October were foreclosure related sales. Specifically, my search of MLS identified 114 obvious foreclosure sales in Mecklenburg County out of 627 sales total. That is compared to 124 foreclosures (or 12%) out of 1056 total during October 2007.
Right now, foreclosure sales are selling for well under what a typical owners are willing to accept. Ultimately, these sales will contribute to declining prices in our area. This is where reality begins to set it. Owner occupied homes (with non-defaulted mortgages) are clearly being affected by foreclosure sales and pricing. To be clear, notice from the numbers that the number of foreclosure sales hasn’t really increased that much. But the number of non-foreclosures has clearly declined which changes the percentages.
In order to compete, owners must surrender to the fact that their home simply won’t command the same prices that they could have gotten two years ago. Only then will the market slowly begin to get back on track.