"The rise in home prices earlier this year has given homeowners a false sense of hope that they will be able to recover equity in time to avoid a short sale," said Richard Eastern. "It would take most homeowners years to regain their equity."
Bellevue, WA (PRWEB) October 15, 2013
Closed short sales in King County fell to 8 percent of overall sales in the third quarter of 2013, according to the Washington Property Solutions 3rd Quarter Short Sale Statistics Report released today.
The decline in short sales can be attributed to several factors, according to Richard Eastern, CEO of Washington Property Solutions, a real estate firm specializing in short sales.
The bad loans that launched the recent financial crisis led to a sharp increase in the number of homeowners who found themselves unable to pay their mortgages. The bulk of those underwater homeowners affected by the subprime mortgage crisis have already worked through a resolution, which included short sale or foreclosure. As a result, Eastern sees the number of short sales starting to return to pre-crisis levels.
"The bad loans that set homeowners up for failure are largely a thing of the past," said Eastern. "But hardships that force a short sale will always be there, whether it's divorce, serious illness, loss of work or job relocation."
Eastern also attributes part of the slowdown in short sales to unrealistic optimism fueled by the increase in home values since the beginning of the year. While the percentage of homeowners that are underwater has decreased, 22 percent of homeowners in King County are still underwater on their mortgage.
"The rise in home prices earlier this year has given homeowners a false sense of hope that they will be able to recover equity in time to avoid a short sale," said Eastern. "Home prices dipped the past few months, but even if they rose again at previous levels, it would take most homeowners years to regain their equity."
The Washington Property Solutions 2013 3rd Quarter Short Sale Statistics Report also saw the percentage of REO sales ("real estate owned" properties owned by the lender) decline during the same period. One factor leading to the decline was a sharp drop in foreclosure proceedings. The number of homes entering the foreclosure process slid to a seven year low in the third quarter of this year.
About Washington Property Solutions
Washington Property Solutions is a real estate firm specializing in short sales based in Bellevue, Washington. Founded in 2003, the company has helped brokers and homeowners successfully negotiate over 1000 short sales. Washington Property Solutions also consults with homeowners on qualification for the Home Affordable Foreclosure Alternatives (HAFA) process and the Washington State Mortgage Foreclosure Fairness Act (FFA). Washington Property Solutions negotiators are licensed Windermere Real Estate brokers.