Snapshot: Who is Buying…and Who is Selling

Who is Buying Homes

Investors continued to be a significant factor in the real estate market, purchasing 15% of homes in October. The majority of those investors (65%) paid cash for the homes they purchased. Sellers often prefer cash buyers over homebuyers who have to qualify for a mortgage to complete the sale.

Only 29% of October’s homebuyers were first-time owners. That’s a much smaller proportion compared with prior years. On an annual basis, the share of first-time buyers is at its lowest level in nearly three decades.

Who is Selling Homes

In another sign that the national real estate market has returned to health, only 7% of October sales were foreclosures and 2% were short sales. The fact that 91% of home sales were traditional sales is good news for homeowners whose property values can be affected by nearby financially distressed discounted home prices. Those lower, distressed values become comparable properties that lenders use to value surrounding homes during the mortgage process.

Foreclosures sold for an average discount of 15% below market value in October. Short sales (homes sold for less than what’s owed on the mortgage) were discounted 10% last month.

Although distressed home sales are down, NAR continues to be worried about the tax consequences for homeowners who lose their homes in a foreclosure and those who have to short-sell their homes. Those distressed homeowners can end up with a giant federal tax bill because the tax code says the amount the lender forgave during the foreclosure or short sale is income.

For example, if your home sells for $100,000 less than what you owed on your mortgage and your lender agreed to take the loss so you can short-sell your home, you could owe federal income tax on that $100,000.

Please contact us  to help you to sell your home and find the home of your dreams!  We specialize in Laguna Beach, Newport Beach, Dana Point, San Clemente and our inland coastal communities.

Make it a great day!

Jeff

rm logo

 

Your Name (required)

Your Email (required)

Subject

Your Message

This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
captcha

Leave a Reply

Your email address will not be published. Required fields are marked *