This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why This Is a Good Time to Buy or Sell a Home

NEW YORK (TheStreet) — In another sign the housing market is returning to normal, "distressed" sales have dropped to the lowest level since December 2007.

The category covers sales due to the homeowner's financial troubles: short sales, in which the lender agrees to retire the debt for less than is owed, usually after the homeowner has fallen behind on payments; and real-estate-owned sales, in which the lender sells a home acquired through foreclosure.

CoreLogic, a market-data firm, says distressed sales accounted for 11.4% of all sales in June, down from 15.8% a year earlier. REO sales accounted for 7.2% of sales, short sales for 4.2%.

"At its peak, the distressed sales share totaled 32.5% of all sales in January 2009, with REO sales making up 28% of that share," CoreLogic said.

The dramatic drop in distressed sales is accompanied by a large decline in foreclosures, now the lowest in six years

The heavy discounts in distressed sales depress home prices in general. So a reduction in distressed sales is good news for all homeowners. It also means, however, that it is harder for buyers to find bargains. 

"The more recent shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount compared to healthy sales than do short sales," CoreLogic said.

Despite the improvement, at 11.4%, distressed sales still make up a larger-than-normal share of the market, CoreLogic says.

"There will always be some amount of distress in the housing market, so one would never expect a 0% distressed sales share, but the pre-crisis share of distressed sales was traditionally about 2%."

Certain markets are still far from normal. In June, distressed sales account for 27% of sales in Michigan, 24.1% in Illinois, 23.6% in Florida and 20.7% in Georgia. 

As mentioned, less competition from distressed sales is good news for sellers. But it doesn't mean prices will surge, because more sellers could enter the market, spurring competition that will help keep prices from rising too quickly.

Some prospective buyers may lament the decline in bargain basement distressed listings, but buyers will benefit if more "normal" homes are put on the market. Many distressed offerings have problems, because homeowners with financial troubles tend to skimp on maintenance and repairs.

In general, this is a good time to house hunt. Prices have gone up, but in most places not very quickly. Since they're not likely to surge, buyers can take time to shop carefully. And mortgage rates are still attractive. Most important, a return to normal means the buyer can purchase without worrying too much that home values will fall.

For prospective sellers a steady market means one can put a home up for sale without too much concern about missing out on higher prices later. And there often are more buyers when loan rates are low.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $92.75 -0.53%
FB $119.07 1.10%
GOOG $709.60 1.20%
TSLA $214.98 1.60%
YHOO $37.26 0.87%


Chart of I:DJI
DOW 17,738.27 +77.56 0.44%
S&P 500 2,056.21 +5.58 0.27%
NASDAQ 4,729.1080 +12.0140 0.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs