And yet another REO update

Here we go again with another look at REO activity in our market. It's been an interesting couple of months to watch the foreclosure segment of our market.


We've been seeing a slight slowdown in our foreclosure filings in the past few months. You'll see the trends in this chart - all of the indicators that I use to forecast upcoming REO listings in our market have dropped off. I don't have the numbers on February filings just yet, but it looks like both our default filings and trustee sale filings are close to the same level this month they've been at for the past few months. It looks like we only had 21 properties go back to the bank in February. Our unlisted inventory of bank owned properties has held steady between 55-65 units for several months, and we're in the low end of that range right now. I'm expecting that to start to head down a little in coming months.

In the early going this year, it looks like REO sales are still accounting for about 60% or so of sales. That's been a pretty constant number for quite some time. Also a constant number is the percentage of new listings that are REO's. So far for the first couple of months of the year, about 39% of our new listings have been REO's. That is almost exactly where that number was for the first two months of last year, and close to the 45% that we saw for the entire year of 2009. Again, however, the current foreclosure numbers make me think that we'll start to see a little bit of a decline here in coming months.

Looking ahead, I don't see any reason to think that we have any dramatic movement in the REO segment of our market. I expect that we'll see some decline in the numbers of foreclosures over the next few months, and a corresponding decrease in these homes on the market following that. I can't say for sure what we'll see late this year or into 2011, but I have a feeling that we're going to start to gradually see short sales gain in market share as banks start to be more proactive in that arena. Resulting from that would be fewer REO's. The total percentage of distressed sales last year was around 75%. I don't have any reason to think that will change. But I wouldn't be surprised if sometime in the next year or so, we see short sales surpass REO's in the number of sold units.