Was 2012 the year of the short sale? Will short sales mitigate losses for mortgage lenders and servicing institutions in 2013, or will they be ignored in favor of fast-track foreclosures? For real estate and mortgage brokers in California, 2012 was definitely a breakthrough year for short sales, and this mini-boom could not have arrived at a better time.
The uptick in short sales was certainly good news for the Golden State, a housing market that experienced very hard times once the housing bonanza of the early 21st century deflated and the Great Recession set in. Outside of California, the short sale situation was not as pronounced –at least not according to Gary Thomas, President of the National Association of Realtors and owner of a real estate brokerage in Southern California. A different view, however, was recently issued by housing analytics firm RealtyTrac; on the Irvine-based company’s national real estate report for the third quarter, short sales were 20 percent of all housing transactions, down from a sizable 40 percent during the second quarter.
Short Sales Were Preferred Over Foreclosure Sales in 2012
They also indicated that short sales were more than 20 percent higher since last year. More than 193,000 homes that were slated for foreclosure were actually rescued from the court-ordered auction or sheriff’s sale during the third quarter by the short sale process. This was actually the third quarterly report in a row to show more short sales than foreclosure auctions.
Short sales were conspicuously absent from real estate and financial news headlines until about 2009. Since then, more than 1.1 million short sales have taken place in the United States, leading many real estate specialists to specialize as short sale specialist. Although firms like RealtyTrac and CoreLogic have not yet compiled the 2012 final numbers on foreclosures and short sales, financial news media network CNBC reported that government-sponsored mortgage investor Fannie Mae had closed on 38,717 short sales just in the first half of 2012. The numbers through the third quarter paint the following picture:
- Q1 2012 Short Sales: 109,521
- Q2 2012 Short Sales: 107,298
- Q3 2012 Short Sales: 193,059
The short sale numbers for the final quarter ending on the last day of the year will not be available until January, but fear of the fiscal cliff talks in Washington stalling and the possible end of the mortgage interest tax deduction are two factors pushing short sales in late 2012. Estimates from housing market observers thus far indicate that short sales in the final quarter of 2012 could approach 200,000 and gain momentum in early 2013.