The number of foreclosed properties sold is declining nationally and in Wisconsin, showing signs that the housing market is stabilizing.
According to data released Thursday by foreclosure data group RealtyTrac, the number of foreclosure sales in Wisconsin during the second quarter of 2012 was down 23 percent from the second quarter of 2011.
Nationally, sales decreased by 22 percent during the same period.
Since the first quarter of 2012, Wisconsin foreclosure sales decreased by 17 percent, according to the RealtyTrac report.
Fewer foreclosures means neighborhood values are increasing, said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors Inc.
That’s good news for sellers, he said, but means buyers will see less deals than in recent years as they begin to experience more competitive bidding, higher prices and fewer discounts.
“Buyers are going to begin missing out on other discounts,” Ruzicka said, “like asking for things such as fences or brick facades to be repaired before moving in. The freebies are going to be gone.”
The market stabilization means buyers are going to have to bid more competitively, said Jeff Joseph, chairman of GMAR.
“Buyers are being forced to become a lot more realistic,” Joseph said. “And if they don’t, they’re going to lose out on properties.
“That means that everything is coming back into equilibrium.”
Investors also are beginning to come out of the woodwork, Ruzicka said, as property values begin to increase.
“Since Christmas there has been an increase in foreclosure sales under $100,000,” he said. “Investors are purchasing over 50 percent of these homes in the city of Milwaukee.”
Foreclosed properties are selling for higher prices nationwide, said Daren Blomquist, RealtyTrac vice president.
Nationally, according to the RealtyTrac report, the average foreclosed home is selling for $170,000, compared to $159,638 in the second quarter of 2011. In Wisconsin, the average sales price is now $109,015, compared to $107,226 in the second quarter of 2011.
Foreclosure sale prices in the second quarter of 2012 increased 6 percent nationally from the previous quarter, according to the RealtyTrac report, and are up 7 percent from the second quarter of 2011.
These numbers show homes are being sold for more because of the limited supply of foreclosures, Blomquist said.
Those figures can be misleading, however, Joseph said. Buyers see sale prices increasing and assume their house can be listed for more, he said. But often, he said, prices are driven up by the sale of an expensive home.
“Sellers see that homes are up nationally, by 10 percent for example, and think their $100,000 home is now worth $110,000,” Joseph said. “But usually it means that more homes in the $300,000 to $500,000 range are selling and driving up the average sale price. It’s very misleading.”
Short sales also are on the decline nationally, according to the RealtyTrac data, as pre-foreclosure sales decreased 9 percent from the second quarter of 2011.
Although the national trend shows declines, some states — including Michigan, Illinois, Connecticut and Massachusetts — reported increases in pre-foreclosure sales, according to the RealtyTrac report.
The discrepancy shows that the housing market still has a ways to go before completely stabilizing, Ruzicka said.
“We’re probably looking at between three to five years before everything’s back to normal,” he said. “By then, we could be looking at how sales were in 2002 before everything crashed.”
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