Was 2012 the Year of the Equity Sale Come Back for Orange County Homes?
What did we see in 2012 in the Orange County real estate market?
In 2012, we saw an almost 20% increase in the number of homes sold in Orange County over 2011. Still, this is only part of the story. The makeup of these homes is what should be the headline. Nearly 25% fewer homes were foreclosed on than in 2011 despite the increase in the number of homes sold. This is a huge change, and beneficial to both the owner of the home and those in the neighborhood who did not feel the negative results of a foreclosure on their home values. Further, it means that equity sellers don’t have to compete against as many REOs which tend to push prices down.
The actual number of homes sold as equity sales increased by nearly 33% from 2011. This shows more homeowners who are choosing to jump in to the market and sell their homes rather than being forced by circumstances to sell at a loss. Hopefully this is an indication of a return to a more normalized and healthy market.
Perhaps one of the most dramatic numbers we saw in 2012 was a large jump in the number of short sales in the second half of the year, with an increase of nearly 150%. I believe this was driven by the very real concern that Congress would not extend the Mortgage Debt Relief Act of 2007 (part of the Fiscal Cliff) past December 31, 2012. If not extended, this could have resulted in a large increased tax burden on short sale sellers. This has been extended to December 31, 2013, and may result in another push at the end of this year in short sales. This extension allows time for experienced short sale agents to save more homeowners from foreclosure.
Sales have been brisk with low interest rates and fewer homes for sale, leading more and more sellers to decide to take advantage of the sellers’ market as a possible way to get more for their home than they might have just a year ago.
For myself, I also saw a change in the types of sales, e.g., resales, I helped my clients complete. In addition to an increase in the number of resale homes, I saw a drop of approximately 17% in the number of distressed homeowners. This leads me to hope that 2013 will continue to show a healthier and more normal market with lower numbers of sales from distressed homeowners.
Are you looking to buy or sell an Orange County home and take advantage of the current market? If so, please contact Christine Donovan at 714-319-9751.