Another excellent number breakdown by my good friend Mike Orr, who runs the MLS statistics website Cromford Report. While I think the entire article is good news for the short sale market, the last paragraph is particularly good (and thus bolded by yours truly). Originally published in the AAR Magazine, direct link here.
The success rate has improved markedly and in June reached 61.8%, the highest we have ever seen. May's success rate was 53.9%, which was also a strong improvement over April's 48.0%
Short Sale Supply
The supply of short sale and pre-foreclosure active listings was 16,509 homes on July 1, 2010, of which 6,735 had a contingent contract (AWC) leaving 9,767 active without a contract. These numbers one year later on July 1, 2011 were: 11,085 (down 33%), 6,616 (down 2%) and 4,469 (down 54%). So we now have fewer than half the number of available short sales without an existing contract.
Time on Market
Time on market is still relatively high for short sales, currently averaging 146 days for closed transactions, but at least this is now trending down from a high point of 160 in April. Many short sales stay in AWC status for a long time awaiting lender approval. Unlike pending status, AWC listings still accumulate days on market because, in theory at least, they are still being marketed for sale to attract another buyer.
Listings shown as pre-approved started to be marked as such on September 17, 2010 and reached a peak of 1,042 active on April 16, 2011. The current number active is now down to 772, so as elsewhere, supply is drying up. There have been 3,584 preapproved short sales listing added to ARMLS since September 17, 2010, which is just under 12% of all short sale listings.
On the Rise
The lender owned market is now declining in size as foreclosure volumes are falling, and short sales are the sector of the market that is growing fastest. They still take patience, but for buyers, they represent excellent value. It is possible to find many short sales in great condition at prices only slightly higher than REOs, and sometimes even cheaper. Given that there are usually far fewer buyers competing for them and often much less fix-up required, I strongly recommend them to buyers who have the time to wait.
With the current decline in supply, these low prices will not last forever. Since our negative equity problem is not going to disappear quickly, we will all need to work with short sales for many years to come, long after the foreclosure backlog has been eliminated.