The San Jose Mercury News today featured an article on REOs...real estate owned properties, clearly explaining why there are so few sales at foreclosure auctions in this area. (See my earlier posts on foreclosures, July 2 & 3) The writer explains that bidding typically starts at the amount of the unpaid balance of the first mortgage, and in a soft market, some homes are no longer worth that much.
No wonder the "bargain hunters" at these auctions aren't bidding! In May, $2.8 billion worth of California real estate went up for sale in foreclosure auctions. $2.6 billion worth didn't sell and ended up owned by the banks that held the mortgages, according to ForeclosureRadar which tracks these things.
Right now, only 8 percent of homes for sale in Santa Clara County (about 450 properties) are considered "distressed." These are either being sold in short sales (my May 21 blog,)in foreclosure or as REOs. These numbers have increased dramatically in the last year.
The numbers are not high enough in the county for us to be concerned yet, because lenders are not deeply discounting, but I'll keep watching this trend.
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