Contradicting the analysts who say that REOs will keep pushing prices down through 2013, Bloomberg reports that short sales are surging — and that may help raise housing prices.
That’s because, according to HomeServices of America (the number two residential brokerage in the country), short sales rose 19 percent in Q2 of 2011 compared to Q1, while foreclosure sales were flat.
And here’s why that’s important: A short sale typically is 20 percent less than the house would normally sell for, but a foreclosed home typically sells for 40 percent less.
So more short sales — as opposed to REOs/foreclosures — means less downward pricing pressure on the market. And that’s what’s happening, according to Bloomberg:
Distressed sales brokered by HomeServices used to be 60 percent foreclosures and 40 percent short sales, [CEO Ron] Peltier said … [n]ow, that ratio has flipped.