We’ve all been reading about how foreclosures are dragging down home-prices across the country. But what effect have foreclosures had on the Seattle market?
To answer this question, Redfin stats man Mose Andre took a look at the percentage of single-family residence homes for sale that are being sold by a bank, also known as REO (Real Estate Owned) listings.
Across all the markets we serve — Seattle, San Francisco, Orange County, San Diego, Los Angeles, Boston, Washington DC and Chicago – that percentage has increased from 3% in April 2008 to 11% as of Monday.
Seattle has also seen an increase, but it has been on a much smaller scale, from .3% of single-family listings to 1.3%.
To assess the effect that foreclosures were having on the remaining inventory, we graphed in green the average asking dollars per square foot for listings on the market, excluding bank-owned listings. Since we measured price changes in terms of average dollars per square foot, we excluded any listings where the square footage was zero.
The Eastside has also seen an increase, but on a very small scale.
To get a sense of how different a market can be, compare our markets to what is happening in San Bernadino, where nearly half the listings are being sold by a bank:
This explains why Seattle prices have declined 13% year over year, while Southern California prices have declined by 26% year over year.
How do we identify bank-owned listings? Well in Seattle as in many other places, the local broker database doesn’t identify bank-owned listings as such, but we obtain our own supply of REO properties by scanning bank sites, and we search all other listings for terms like:
- foreclosure, foreclosed (but not pre-foreclosure)
We also search for a combination of:
- bank or banked
What this means is that comparisons between regions are odiferous; any database that explicitly identifies REOs will have a higher detected incidence of REO properties. But what still seems clear is that bank-owned listings are less common in Seattle that elsewhere, but their prevalence is rising.