Flipping Homes is Hot Once More!

(MCT)—Seasoned real estate investor Kurt De Meire led an eager group of students on a field trip to a recent foreclosure auction. He wanted to show them how to flip homes — find bargains and resell them quickly at a profit.
At one point, he nonchalantly pulled an item out of an envelope from one of his clients, an investor who couldn’t make it to the Pomona, Calif., auction that morning. The newbies ogled it. It was a cashier’s check for $1 million. “There will be millions of dollars of real estate sold here,” De Meire says, gesturing toward veteran bidders in T-shirts and jeans as the auctioneer began rattling off property addresses. “These people would not be here if they weren’t getting good deals every day.”

The house-flipping frenzy of the mid-2000s, glamorized on TV reality shows such as “Flip This House” and “Flipping Out,” helped drive up prices to unrealistic heights before the housing bubble burst. Since then, however, investors paying cash for distressed properties have been credited with helping the real estate recovery.
Relatively low housing prices and interest rates have fueled a renewed fascination with flipping in the past few years. But competition from large private funds buying homes to rent out and rising prices are changing the market.

House flipping increased 19 percent year-over-year across the nation in the first half of the year, a July report from housing data firm RealtyTrac shows.
“I would say the climate is getting a lot more difficult for the house flipper,” says Ryan Meltcher of Brea, Calif., who invested in about 80 homes last year. “It’s harder to find good inventory.”
Investors have various ways to buy available, lower-cost properties. One route is to attend the auctions of homes going into foreclosure.

Homes aren’t the only properties on the block; apartment and commercial buildings are part of the mix, too. Postponements are common, as owners in default scramble behind the scenes for loan modifications, try to sell the home at a loss or file for bankruptcy. De Meire’s client who gave him the $1 million check didn’t score the property he wanted at the auction in Pomona. The sale rolled.
De Meire owns CountyRecordsResearch.com in Huntington Beach, Calif. The firm — operating in California, Arizona and Nevada — processes foreclosures for lenders, tracks distressed real estate and teaches investors how to buy the properties. He also provides a bidding service at auctions for investors who can’t attend.

When he takes would-be flippers on field trips to the auctions, De Meire, in his wide-brimmed hat, speaks in a slow, instructive style as he explains the auction process. He also ticks other ways investors can find opportunities, all before a home is relisted on the market.
You can approach a homeowner long before the foreclosure auction, he tells the students, once the property goes into default, which is the first step in the repossession process.
Or you could buy a delinquent note from the bank at a discount and take over the home loan, he suggests, essentially becoming the lender, and eventually foreclosing on and reselling the property at a profit.

Another idea: Try to buy the home from the lender immediately after the auction in what’s technically called the trustee sale, after no one has bid on it and the home has just reverted to the bank.
Or snap up the home from another investor who bid successfully on the property at the auction — an on-the-spot flip. This scenario offers the luxury of an escrow period, De Meire said, and a chance to get financing and title insurance, which can’t be done before bidding at the auction.
But, De Meire says: “Don’t ever limit yourself to bidding at these sales. There’s much more to this business.”

Virgil Thompson of Los Angeles, who performs energy audits on buildings for a national company, came to Pomona to learn how to buy properties at the foreclosure auction. But after listening to De Meire, he left with another idea.

“I like his smart strategy of buying the note,” Thompson says.
De Meire, 57, became an investor when he was in his 20s. At that time, he said, he heard, “ ‘People my age would never be able to afford real estate.’ ‘Values are too high.’ ‘The opportunities are behind you.’”

But that wasn’t true. “There’s no end to opportunities if you know all the different ways to take advantage of the marketplace,” he says.
No matter what the housing market does, he noted, people will always get into trouble with their money. Homeowners run into problems because of a divorce. Some borrowers become alcoholics or gamble away the mortgage.

“There’s never an end to people going into foreclosure, for so many different reasons,” De Meire says. Other investors bypass foreclosure auctions entirely.

Every home Meltcher buys is distressed — the owners are in default or the residence is in some other stage of foreclosure. He buys the homes on the open market — including properties on the multiple listing service and pocket listings from agents — rather than at the auctions. Meltcher, owner and principal of real estate investment company The Investment Division in Brea, said he’s on track to buy at least 80 more properties this year, outpacing last year.

But with housing prices and interest rates rising, he said, fewer buyers have materialized: “I have a lot more property today in my inventory that I’m holding than I ever did.” That means reselling in six to eight weeks, he says, rather than three to five weeks.
Meltcher says the market has attracted amateurs who cut corners, which creates a negative ripple effect.

“I see a lot of armchair investors coming into the market and not taking the time and energy to do things correctly,” he says. “People take a lot of shortcuts. People think it can be done cheaply, that quality doesn’t count. They’ll put in new carpet and paint and walk away.”
When the restoring of a home isn’t up to par, he said, it won’t appraise for top dollar, which hurts comparable property sales nearby.

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Better Schools Means Pricier Homes

Redfin took a look at homes on Multiple Listing Services (MLS), databases used by real estate brokers, that sold between May 1 and July 31, 2013 to calculate median sale price and price per square foot of homes within school zones. School zone boundaries were provided by Maponics. School data and school test scores were provided by Onboard Informatics and GreatSchools. School service boundaries are intended to be used as reference only. To verify enrollment eligibility for a property, contact the school directly. The percentile rankings are based on test scores for each of the schools in this report. School and home coverage consisted of 10,811 elementary school zones across 57 metro areas and included 407,509 home sales.

The High Cost for Schools With Top Test Scores

In the age of Tiger Moms and raising the Smartest Kids in the World, getting the best education for their kids has become a borderline obsession for American parents. Problem is; it’s not cheap. And we’re not just talking about private schools. In the United States, housing prices in the zones of highly ranked public schools are remarkably higher than those served by lower ranked schools. Although we were somewhat floored by the higher prices in many zones, the good news for parents is that there are several neighborhoods left where homes are relatively affordable in highly ranked school zones. Redfin was able to uncover these steals by analyzing home prices and test scores of elementary schools across the country.
For this study, we analyzed home prices compared to the test scores of elementary schools across the country. While we expected to see higher prices for homes in highly-ranked school zones, we didn’t expect the difference to be so large. In certain markets, the difference amounted to hundreds of thousands of dollars for similar homes in the same neighborhood.

Median home sale prices vs school test score ranking. (Click for full size)

Chicken or the Egg: Are Higher Ranked Schools a Result of Better Homes?

Everyone assumes that better school districts tend to have bigger homes, higher quality homes, larger lots, or a more prime location (views, quiet streets, etc). We’ve debunked that assumption. When accounting for size, on average, people pay $50 more per square foot for homes in top-ranked school zones compared with homes served by average-ranked schools. This means that the price differences for similar homes located near each other but served by different schools can range from tens to hundreds of thousands of dollars.

Median sale price per square foot compared to school’s test score rank (Click for full size)

Homes just a short distance apart with nearly identical attributes are selling for drastically different prices. We’ve looked across the country at homes that have sold in the last three months and found five examples where the prices vary on identical homes by as much as $130,000.

Location Alexandria, VA High rated school zone  Waynewood (90) Low rated school zone  Belle View (50) Home attributes 4 bed, 3 bath, 3000 sqft Distance b/n homes: 0.75 miles Price difference $130,000

Location Beaverton, OR High rated school zone  Cooper Mountain (99) Low rated school zone  Errol Hassell (50) Home attributes 4 bed, 2.5 bath, 2100 sqft Distance b/n homes: 0.5 miles Price difference $43,000

Location San Diego, CA High rated school zone  Curie (99) Low rated school zone  Hawthorne (30) Home attributes 4 bed, 3 bath, 1800 sqft Distance b/n homes: 0.75 miles Price difference $83,000

Location Seattle, WA High rated school zone  Wedgwood (99) Low rated school zone  John Rogers (40) Home attributes 3 bed, 1 bath, 1500 sqft Distance b/n homes: 0.5 miles Price difference $44,000

Location Gilbert, AZ High rated school zone  Sonoma Ranch (99) Low rated school zone  Patterson (10) Home attributes 4 bed, 2 bath, 2000 sqft Distance b/n homes: 0.75 miles Price difference $51,000

How Much More for a Top-ranked vs. Average-ranked School Zone?

Every metro area in this report has higher prices for homes served by top-ranked public elementary schools. Coastal California leads the way in terms of cost, with homes in the highest-ranking school zones running from $300,000 more in Los Angeles to nearly $500,000 more in San Jose. Although the dollar cost differences in Miami and Phoenix were not as great, homes in the top-ranked school zones were still more than twice the price of homes in the average-ranked school zones, going from about $150,000 to $300,000 in median home sale price.
At the other end of the spectrum, Queens, NY, Raleigh, NC, and Eugene, OR offer smaller price differentials when going from an average-ranked school to a top-ranked school. For the chart below, average schools have test scores between the 40th and 60th percentiles in their state, while a top tier school is defined as the 90th percentile and above within its respective state.

Pockets of Affordability in Each Metro

So, what’s an ambitious parent to do with these rather daunting home prices? Fortunately, Redfin crunched the numbers and found numerous highly-ranked schools across the country where homes were significantly more affordable compared to homes within the boundaries of the top-ranked local schools. Click on any of the schools below to drop into Redfin and find homes currently for sale served by these more affordable school zones.

Metro Area	School	Median Sale Price	Discount from Median Sale Price for Top-ranked School
Atlanta	Due West Elementary School (Marietta, GA)	$ 180,000	32%
Austin	Sims Elementary School (Austin, TX)	$ 136,000	57%
Baltimore	Charlesmont Elementary School (Dundalk, MD)	$ 135,000	59%
Boston	Fox Hill Elementary School (Burlington, MA)	$ 415,000	26%
Charlotte	Highland Creek Elementary School (Charlotte, NC)	$ 173,000	37%
Chicago	Troy Crossroads Elementary School (Shorewood, IL)	$ 151,000	45%
Denver	Mortensen Elementary School (Littleton, CO)	$ 155,000	58%
Houston	Lomax Elementary School (La Porte, TX)	$ 138,000	51%
Las Vegas	Fay Galloway Elementary School (Henderson, NV)	$ 145,000	29%
Long Island	John Pearl Elementary School (Bohemia, NY)	$ 331,000	46%
Los Angeles	Dysinger Elementary School (Buena Park, CA)	$ 423,000	43%
Miami	Del Prado Elementary School (Boca Raton, FL)	$ 190,000	42%
Philadelphia	Manoa Elementary School (Havertown, PA)	$ 241,000	24%
Phoenix	Brinton Elementary School (Mesa, AZ)	$ 147,000	57%
Portland	McKay Elementary School (Beaverton, OR)	$ 230,000	39%
Queens	P.S. 242 – Stavsky Elementary School (Flushing, NY)	$ 164,000	54%
Riverside	Bear Gulch Elementary School (Rancho Cucamonga, CA)	$ 235,000	38%
Sacramento	Trajan Elementary School (Orangevale, CA)	$ 250,000	30%
San Diego	Los Penasquitos Elementary School (San Diego, CA)	$ 223,000	66%
San Francisco	Redding Elementary School (San Francisco, CA)	$ 635,000	28%
San Jose	Meyerholz Elementary School (San Jose, CA)	$ 640,000	44%
Seattle	Westhill Elementary School (Bothell, WA)	$ 350,000	29%
Ventura	Sycamore Elementary School (Simi Valley, CA)	$ 431,000	38%
Washington	Potomac Landing Elementary School (Fort Washington, MD)	$ 300,000	46%

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Home Sales Reach Record High in 6.5 Years!

In July, U.S home prices continued to increase, according to the latest S&P/Case-Shiller Home Price Index. On a year-over-year basis, home prices grew by 12.4 percent in July, the fastest annual pace since February 2006, at the height of the housing bubble. While this is good news for housing, a closer look reveals that while prices are still accelerating, the rate is decelerating; the July increase was a modest 1.8 percent, the smallest monthly gain since March.

A decelerated growth was seen in 15 out of the 20 cities tracked. The 20-city composite grew a shy 0.6 percent from a month earlier, a notable difference from the 0.9 percent gained in June and the 1 percent gained in May.

“Since April 2013, all 20 cities are up month to month; however, the monthly rates of price gains have declined,” said S&P Dow Jones Index Committee Chairman David Blitzer, in a recent release. Blitzer continued by stating that “the rate of increase may have peaked.”

Not all industry professionals agree with the idea of a price peak. “Real estate values have been playing catch up for a while now and the increases in values as measured by Case-Shiller have been unsustainably high,” says Dr. John Tuccillo, Florida REALTORS’ Chief Economist and former NAR economist. “Increases of this magnitude really can’t continue, but that doesn’t mean that they will reverse. Rather, we see positive value changes but at a lower rate. For example, in Florida we appear to be settling into a 4.5-5 percent real increase in values. This is sustainable for the foreseeable future.”

Americans still seem to be in good spirits in regards to home prices. According to a recently released Bankrate report, among households earning between $50,000 and $75,000 per year, some 65 percent surveyed expect prices to rise, 27 percent say they will stay the same and just 6 percent expect prices to fall.

Distressed Homeowners Find Renewed Hope!

http://hosted.cdpe.com/8007/

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Is your Mortgage out of Balance with Your Budget?

Today's homeowners have a lot to fear. Budgets are tight and it doesn't take much before "barely getting by" tips into avoiding collector's phone calls, sleepless nights and falling further behind.
Many homeowners don't think it's possible to tip the scales back in their favor so they simply give up.

You do not have to lose your home to foreclosure!

As a real estate professional who has earned the Certified Distressed Property Expert (CDPE) designation, I am uniquely qualified to help homeowners as they attempt to bring balance back to their budgets.

If you, or someone you care about feels like the scales are weighted against them and need help, contact me today for a confidential consultation!

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1 In 5 Real Estate Sales Are From Foreclosures

RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties and real estate data, today released its Q1 2013 U.S. Foreclosure & Short Sales Report™, which shows a total of 190,121 U.S. properties in some stage of foreclosure or bank-owned (REO) were sold during the quarter, a decrease of 18 percent from the previous quarter and down 22 percent from the first quarter of 2012.

These foreclosure-related sales accounted for 21 percent of all U.S. residential sales during the first quarter, down from 25 percent of all sales in the first quarter of 2012 and down from a peak of 45 percent of all sales in the first quarter of 2009.

Properties not in foreclosure that sold as short sales in the first quarter accounted for an estimated 15 percent of all residential sales — bringing the total share of distressed sales during the quarter to 36 percent. Non-foreclosure short sales also trended lower in the first quarter, down 10 percent from the previous quarter and down 35 percent from the first quarter of 2012.

“We expected foreclosure-related sales to be lower given the downward trend in new foreclosure activity nationwide over the past two and a half years, but the decrease in non-foreclosure short sales was a bit of a surprise given the 11 million homeowners nationwide still underwater,” said Daren Blomquist, vice president at RealtyTrac. “Rising home prices in many markets are stunting the continued growth of short sales by reducing incentive for both underwater homeowners and lenders. Underwater homeowners may be willing to stick it out a few more months or even years in the hope that they will be able to walk away with money at the closing table and without a hit to their credit rating, and for lenders a failed short sale may no longer translate into bigger losses down the road given that average prices of bank-owned homes are rising — at a faster pace than non-distressed home prices in many markets.”

 

Other high-level findings from the report:

• States with the biggest percentage of foreclosure-related sales were Georgia (35 percent), Illinois (32 percent), California (30 percent), Arizona (28 percent), and Michigan (28 percent). States where foreclosure-related sales account for less than 10 percent of all sales include Massachusetts, New York, and New Jersey.

• The average price of a foreclosure-related sale was $167,095 in the first quarter, down 1 percent from the previous quarter but up 3 percent from a year ago — the fourth straight quarter with an annual increase in the average price of foreclosure-related sales.

• Markets with the biggest annual increases in the average price of foreclosure-related sales included San Jose, Calif., (up 30 percent), Dayton, Ohio, (up 27 percent), Phoenix (up 26 percent), Las Vegas (up 23 percent), and Sacramento, Calif., (up 21 percent).

• The average price of a property in foreclosure was 30 percent below the average price of a non-foreclosure property in the first quarter, down from a 31 percent discount in the fourth quarter but up from a 28 percent discount in the first quarter of 2012.

• Both pre-foreclosure sales and bank-owned sales decreased from the previous quarter and a year ago. Pre-foreclosure sales accounted for 10 percent of all residential sales in the first quarter, and bank-owned sales accounted for 11 percent of all residential sales.

• States with the biggest percentages of non-foreclosure short sales were Rhode Island (44 percent), Connecticut (42 percent), Massachusetts (40 percent), Nevada (29 percent), Florida (26 percent), and Ohio 24 percent.

Local market perspectives from the RealtyTrac Broker Network
Following are perspectives on distressed sales trends provided by brokers from various parts of the country who are part of the RealtyTrac Broker Network.

“Clearly in metropolitan New York we have entered into a period of stability in the pre-foreclosure market,” said Emmett Laffey, CEO of Laffey Fine Homes, which covers Long Island and the five boroughs of New York city. “In metro New York foreclosure sales represent 8 percent of the market, which is now close to historic foreclosure levels for any market over the last decade.  It's a good sign.”

“Most of the foreclosure properties are purchased by investors at the courthouse auctions and are paid for in cash, which is not possible for the average buyer looking for a home to live in,” said Rich Cosner, president of Prudential California Realty, covering Orange, Riverside and San Bernardino counties in Southern California. “Even investors at the courthouse auctions are bidding up the prices to the point that there is a greatly reduced opportunity to flip a property in a short period of time. Most of the investors today are buying the property, fixing it up and renting it out and hoping to have a great profit in three to five years.”

“It’s not surprising that foreclosure-related sales are down in Oklahoma because home prices are rising so rapidly,” said Sheldon Detrick CEO of Prudential Detrick/Alliance Realty in Oklahoma City and Tulsa. “In fact, short sales are disappearing from the marketplace entirely. Oklahoma City is the strongest market in the state and will continue to grow in the aftermath of the tornado that ripped through the area destroying over 10,000 homes. Right now there is nothing available to rent from cars to houses to furniture. Demand is drying up any and all inventory in the area.”

“We are seeing foreclosures and foreclosure sales decrease in the Reno area and we anticipate that the trend will continue,” said Craig King, COO of Chase International brokerage covering the Reno, Nev., and Lake Tahoe markets. “Typically, we would have four or five times the amount of inventory on the market so demand is driving home prices in the area up. REO sales are significantly less in the Reno Sparks area than other markets in the west. The market here is strong and we are mimicking similar growing markets such as Sacramento and Las Vegas.”

Foreclosure sales in 20 largest metro areas
Foreclosure-related sales accounted for 38 percent of all sales in the Atlanta metro area, the highest percentage among the nation’s 20 largest metropolitan statistical areas in terms of population.

Other metros where foreclosure-related sales accounted for at least 25 percent of all sales were Riverside-San Bernardino in Southern California (35 percent), Chicago (35 percent), and Detroit (30 percent), Los Angeles (29 percent), Miami (28 percent), Tampa (27 percent), Phoenix (27 percent), San Diego (26 percent), Minneapolis (26 percent), Seattle (25 percent), and San Francisco (25 percent).

Pre-foreclosure sales down nationally after surging in 2012, up in 13 states
Third parties purchased a total of 88,750 pre-foreclosure residential properties — in default or scheduled for auction — in the first quarter of 2013, down 20 percent from the fourth quarter of 2012 and also down 20 percent from the first quarter of 2012. It was the lowest quarterly number of pre-foreclosure sales since the third quarter of 2009. Pre-foreclosure sales hit a record annual high in 2012, with 454,727 during the year.

Pre-foreclosure sales accounted for 10 percent of all residential sales in the first quarter, the same as the previous quarter but down from 11 percent of all sales in the first quarter of 2012.

Despite the national decrease, pre-foreclosure sales increased annually in 13 states, including Washington (up 76 percent), Illinois (up 36 percent), Maryland (up 35 percent), and Pennsylvania (up 15 percent).

In the first quarter of 2013, pre-foreclosure properties sold for an average price of $187,040, down 1 percent from the previous quarter but up 5 percent from the first quarter of 2012 — the second consecutive quarter with an annual increase in average price of a pre-foreclosure property. States with double-digit annual increases in average pre-foreclosure sales prices included Nevada (up 23 percent), Arizona (up 20 percent), Florida (up 13 percent), California (up 12 percent), and New York (up 11 percent).

The average price of a pre-foreclosure residential property in the first quarter was 22 percent below the average price of a non-foreclosure residential property, down from a 23 percent discount in the fourth quarter but up from a 20 percent discount in the first quarter of 2012.

Pre-foreclosure homes that sold in the first quarter took an average of 382 days to sell after starting the foreclosure process, up from an average of 336 days in the previous quarter and up from an average of 306 days in the first quarter of 2012.

REO sales down to lowest level in five years
Third parties purchased a total of 101,371 bank-owned properties in the first quarter of 2013, down 16 percent from the fourth quarter of 2012 and down 23 percent from the first quarter of 2012. The first quarter total was the lowest quarterly number of REO sales since the first quarter of 2008.

REO sales accounted for 11 percent of all residential sales during the quarter, the same as in the previous quarter but down from 13 percent of all sales in the first quarter of 2012.

Despite the decrease nationwide, REO sales in the first quarter increased annually in 11 states, including Ohio (up 48 percent), North Carolina (up 46 percent), Illinois (35 percent), Missouri (27 percent), and Florida (12 percent).

In the first quarter of 2013, REO properties sold for an average price of $147,810, down 1 percent from the previous quarter but up 1 percent from a year ago — the fourth consecutive quarter with an annual increase. States with the biggest annual increases in average REO sales prices included Georgia (up 29 percent), Arizona (up 24 percent), Nevada (up 22 percent), California (up 22 percent), and Missouri (up 17 percent).

The average price of an REO residential property in the first quarter was 38 percent below the average price of a non-foreclosure residential property, down from a 39 percent discount in the previous quarter but up from a 34 percent discount in the first quarter of 2012.

REOs that sold in the first quarter took an average of 168 days to sell after being foreclosed, down from the 178-day average from both the previous quarter and a year ago.

Non-foreclosure short sales
Short sales (where the sales price was below the estimated amount of all outstanding loans for a given property) of properties not in foreclosure accounted for an estimated 15 percent of all U.S. residential sales during the first quarter of 2013 but total volume of non-foreclosure short sales in the first quarter was down 10 percent from the previous quarter and down 35 percent from the first quarter of 2012.

States with the biggest percentages of non-foreclosure short sales included Rhode Island (44 percent), Connecticut (42 percent), Massachusetts (40 percent), Nevada (29 percent), Florida (26 percent), and Ohio (24 percent).

Major markets with the biggest percentages of non-foreclosure short sales included Boston (38 percent), Cleveland (33 percent), Memphis (32 percent), Las Vegas (32 percent), and Detroit (30 percent).

The average market value of homes sold via short sale in the first quarter was $178,392, down 4 percent from the previous quarter but up 5 percent from the first quarter of 2012. States with the highest average market value of first quarter short sales included New York ($476,292), Hawaii ($438,563), Massachusetts ($313,831), Connecticut ($276,452), and California ($247,618).

Report methodology
The RealtyTrac U.S. Foreclosure Sales Report is produced by matching national address-level arms-length sales deed data against RealtyTrac’s foreclosure database of pre-foreclosure (NOD, LIS), auction (NTS, NFS) and bank-owned (REO) properties. A property is considered a foreclosure sale if a sales deed is recorded for the property while it was actively in some stage of foreclosure or bank-owned. Previous quarterly numbers may be revised upon the issuance of a new quarterly foreclosure sales report because of new sales deed data received by RealtyTrac. The foreclosure discount is calculated by comparing the percentage difference between the average sales price of properties not in foreclosure to the average sales price of properties in some stage of foreclosure or bank-owned. States without sufficient foreclosure sales data to calculate average prices are not included in the report.

Glossary of Terms
Foreclosure (FC) sale: a sale of a property that occurs while the property is actively in some stage of foreclosure (NOD, LIS, NTS, NFS or REO). This includes only sales to third-party buyers or investors. It does not include property transfers from the owner in default to the foreclosing bank or lender.

REO sale: a sale of a property that occurs while the property is actively bank owned (REO).

Pre-foreclosure sale: a sale of a property that occurs while the property is actively in default (NOD, LIS) or scheduled for foreclosure auction (NTS, NFS).

Pct. of all sales: total number of Foreclosure Sales (or Pre-Foreclosure Sales or REO Sales) as a percentage of all residential sales during the quarter or year.

Avg. FC sales price: the average sales price of Foreclosure Sales (including both Pre-Foreclosure Sales and REO Sales) during the quarter or year, excluding sales with no sales price.

Avg. FC discount: the percentage difference between the average sales price of foreclosure sales and the average sales price of non-foreclosure sales during the quarter or year.

Avg. REO discount: the percentage difference between the average sales price of REO sales and the average sales price of non-foreclosure sales during the quarter or year.

Avg. pre-foreclosure discount: the percentage difference between the average sales price of pre-foreclosure sales and the average sales price of non-foreclosure sales during the quarter or year.

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New Single-Family Home Size Rises

The size of a typical new single-family home rose in second quarter of 2013 continuing a post-recession trend. The recent increase in size is likely due to an atypical mix of buyers.

According to data from the Census the Quarterly Starts and Completions by Purpose and Design survey, the average and median size of single-family homes started during the second quarter actually fell somewhat from the first quarter. The average single-family square footage fell from 2,689 to 2,647, while the median declined from 2,472 to 2,441.

 
 
However, on a less volatile one-year moving average, the size of new single-family homes continued their rising trend. Since cycle lows and on a moving average basis, the average size has increased almost 10% to 2,599, while the median size has increased more than 13% to 2,382.
As noted in NAHB’s analysis of 2012 Census construction data, the recent rise in single-family home sizes is consistent with the historical pattern coming out of recessions. Home sizes fall into the recession as some homebuyers cut back, and then sizes rise as high-end home buyers, who face fewer credit constraints, return to the housing market in relatively greater proportions.

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