Rising foreclosures pressure housing prices

Thomas Blanchard, who sells bank-owned properties in Las Vegas, said the trend has accelerated the past two months, and he estimates that 60 percent of properties on the market there are in foreclosure.

“The only people that you have in our market here in Las Vegas are the people that have to sell,” Blanchard said.

The same is true in parts of California. In December, 46 percent of homes sold in the Sacramento area and 31 percent in the San Diego area had gone through foreclosure, up dramatically from about 4 percent a year earlier, according to San Diego-based DataQuick Information Systems, a real estate information firm.

Banks, faced with the mounting costs of holding properties, are cutting prices. The average price of a foreclosure sale nationwide dropped about $1,000 last year to about $226,000, according to RealtyTrac.

While foreclosure sales are bad news for homeowners in neighborhoods with high foreclosure rates, they are a boon for well-financed buyers looking for properties at bargain prices. And in broad terms, economists view them as part of getting back to more realistic prices after years of excess.

Alejandro Diaz-Bazan, who sells foreclosed properties in Miami, said banks seeking to unload foreclosed properties are looking for buyers that can close deals quickly, and therefore need to have a hefty down payment. This month, Diaz-Bazan said a European client bought two foreclosed condominiums as an investment.

“The bank really is out to move them, to liquidate them,” Diaz-Bazan said. Despite the downward pressure on prices, he said, “property prices in Miami have not dropped enough” for the market to rebound.

More than half of houses sold in San Diego last month were either bank-owned properties or “short-sales” in which a lender agrees to accept less than the value of the mortgage to avoid a foreclosure, according to Su, the investor. That number was up dramatically from 26 percent in August, according to calculations Su made by combing through the San Diego real estate listings database.

In an effort to get a handle on the scope of the problem, the National Association of Realtors is conducting an informal survey of the issue and is planning to release findings later this month, spokesman Walter Molony said.

Experts emphasize that the available data paints an incomplete picture. That’s because the Realtors group doesn’t count all foreclosure sales because many foreclosures are sold through auctions and are not listed on the regional databases where the trade group gets its data. The Realtors group is scheduled to release its fourth-quarter state-by-state update on home sales Thursday.

RealtyTrac’s foreclosure records come from about two-thirds of U.S. counties and cities. The company says it counts foreclosure sales by matching up property sales records with its foreclosure database.

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