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Foreclosures Effecting Home Sales Prices

March 23rd, 2012

46% of February home sales were valued under $50,000. The majority of these 472 home sales were bank and investor sales hitting almost every zip code in the county.

The top sellers of these properties were Fannie Mae, Housing and Urban Development, Bank of New York, Federal Home Loan Mortgage Corp and Federal National Mortgage Association.

Some of the top buyers of the homes valued under $50,000 included: Memphis Invest, Direct J Home Solutions, Mid South Homebuyers Inc. and Stable Investments.

Year-to-date foreclosures are up 42% from last year. If we continue to see this level of activity we could hit well over 5,000 foreclosures for the year compared to the 4,000 we had in 2011. Last year had the lowest number of foreclosures that we had seen since 2005 before the subprime mortgage crisis hit in 2006.

Recent policy changes have sped up the foreclosure process and we expect to see banks again moving forward with foreclosure starts and home seizures. The activity that had stalled during the foreclosure moratorium has cleared and the paperwork issues and lawsuits seem to be behind us.

The Federal Government has launched several new programs to assist homeowners with modifying their mortgages and these programs are expected to provide relief to about 10% of the total number of homes in jeapordy of foreclosure.

Pilot programs are running in major cities for investors to purchase foreclosures in bulk from Fannie Mae at a discounted rate with guarantees in place that the investors will hold the properties as rental units for a set number of years.

At the end of 2011 Shelby County had 3,767 homes in foreclosure inventory valued at over $351 million. As foreclosure activity picks back up and banks start selling these properties at steep discounts, home sales prices could continue to remain stagnant or fall below 2011 values.

The average home sales price in February was $97,704. The last time average sales prices were under $100,000 was back in 1995 when sales averaged $97,992.

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