Distressed Home Market May Narrow Further


Home buyers or investors prospecting for distressed or foreclosed properties may find their band of choices increasingly narrower. While there may still a good selection of bank-owned properties among Sarasota homes for sale, it is unlikely that foreclosures coming onto the market will hit the peak levels experienced during the previous housing crisis.

Measures scheduled to expire by year-end have been extended to help prevent a repeat of the record increase in lenders’ home seizures experienced during the last home market collapse, which led to a flood of foreclosed homes for sale nationwide. Just in May 2015, the federal government extended up to December 31, 2016, its two programs assisting homeowners at risk of mortgage default or those who are underwater as their home loan balance far exceeds their properties’ worth.

One of the government measures is the loan modification program which lowers to a more affordable level a borrower’s payments either by extending the loan term or temporarily reducing the interest rate on the principal which remain unchanged.The other relief program is an option for refinancing at lower interest rates for an underwater homeowner but who is current on payments.

Borrower challenge remains

Distressed Home Market May Narrow Further

A continuing decline in new borrowers availing of these two programs has been noted, partly due to the sustained housing market recovery as seen in improved prices of Sarasota homes for sale. Nonetheless, the measures were extended because many home loan borrowers continue to face challenges in either meeting mortgage payments or refinancing their loans. Government estimates put at over 600,000 nationally the borrowers which remain eligible for these refinancing programs.

National data for March 2015 do indicate that home loan difficulties still persist, and there’s much wisdom to the extension of the relief measures. For the month, there was an increase in U.S.-wide foreclosure filings which totaled 122,060 cases, up 20% from February’s 104-month low and a 4% increase from March 2014. Nationwide, banks foreclosed 36,452 homes this March, up 49% from February and an increase of 25% from a year earlier.

This year-over-year advance represents a 17-month high and was the first increase in overall U.S. foreclosures since September 2010. Analysts emphasized though the March spike represents continuing cleanup of distressed properties from the last housing crisis and is not the harbinger of a new crisis. It’s believed that the March rise was just part of the expected statistical noise as foreclosure activity stabilizes towards year-end.

Where to look as foreclosures thin

Indeed, signs of stabilization are being felt in Florida, even as it still tops in terms of foreclosure cases. During the 2015 first quarter, Florida had 50,683 foreclosure filings, down 6% from the fourth quarter and a 27% decline from the first three months of 2014.

Regionally, improvements are also evident, with the 343 March foreclosure filings recorded in Sarasota County down 18% from February and almost 13 % below a year ago. In Manatee County, March saw 174 foreclosures, a 34% drop from the prior month and a 19% drop from March 2014.

To track these foreclosed properties which eventually wind up among Sarasota homes for sale, online resources, like Sarasota Bay Estate, which update listings hourly are quite helpful. This May, it added several new listings of foreclosures priced in the $100s, traditionally regarded as a sweet spot for buyers seeking distressed properties on the market.