Foreclosures

REO properties consisted of about 9% of active listings and about 30% of sales.  Very few REO properties expired (1.4%).  This indicates that REO properties are perceived as bargains and are being picked over by investors and owner/occupants.  It further indicates that lenders sell REO properties cheaply to clear balance sheets of non-performing assets.  The preponderance of REO properties creates downward price pressure on traditional listings.

REO properties consisted of about 2% of active listings and about 4% of sales.  Foreclosures did not significantly affect value in the subject’s neighborhood.  There were no REO sales or listings in the subject’s subdivision.

Of 78 active listings in the market, 13 are identified as REO in FMLS. Of 161 sales in the past 12 months, 76 are a foreclosures.  The total number of foreclosures are likely to be slightly higher since this information is gathered from FMLS and not all agents identify the property as a foreclosure.  The market is REO driven.

Due to the current overall market conditions from recent mortgage/credit crisis, there are a significant amount of REO sales within this market and yes they are a factor on values primarily due to the rule of substitution (why would a prospective buyer purchase a new or resale home at an arms length transaction/typical value when the same reo home could be purchased for considerably less).

According to [the local listing service], foreclosures are 30% of all sales and 10% of all listings within the subject's market area (See 1004MC).  REO sales and listings are relevant and affect value of the subject property.