For the past few months it has seemed the inventory of quality foreclosure and short sale cabins in the Smoky Mountains has decreased. When I say quality foreclosure and short sale cabins I refer to properties that would return a good investment and be a good overnight rental cabin. Some of the features, in my opinion, to qualify for this would be having a good mountain view or a good location (in a good subdivision/resort). The buyer competition for aggressively priced properties has certainly increased. In part, because of Fannie Mae and Freddie Mac policies of a 15 day waiting period for a second home purchaser or investment buyer. This policy has caused the property to be on the market for 15 days and creates multiple offer situations which tend to drive up the purchase prices on properties in most circumstances. My curiousity led me to study the statistics of sold foreclosures and short sales from the period of February 15, 2011 to March 29, 2011 (the day I am writing this). Below is my analysis of what I have gathered based on these sales.
During the period of 2/15/2011 to 3/29/2011 there were 50 foreclosure and short sale properties sold. This time period has been a low number in our area for the number of units sold. I did not seperate cabins versus residential homes in this study. Of the 50 properties sold, a staggering 26 (more than 50%) were cash sales. This is trending significantly higher than in the past when conventional loans were more common than cash sales. Of the 50 sales, 18 were conventional loans, 4 FHA, and 2 “other” or owner finance with banks. The 26 cash sales lead me to believe investors and savers are getting into the market more and switching their assets from cash to real estate. A lot of this can probably be attributed to the decline of the dollar and the Fed policy of QE2 (Quantitative Easing II).
Other interesting information gained from the statistics were the purchase price versus listing price. Back a few years ago to fairly recently, it was common for short sales and foreclosures to be sold for well less than the listing price. It seems properties are beginning to be priced more aggressively and more in line with the market currently. Total sales volume of the 50 properties was $8,193,606 while the total listing price of the properties was $8,438,550. This reflects a little higher than 97% for a sales price/list price ratio. This is considerably higher than in the past. Part of this is due to properties being more aggresively priced along with more competition from buyers with limited “quality” foreclosures and short sales available.
Of the 50 properties sold, a whopping 12 sold for more than the listing price (with many selling for substantially higher). Knowing that nearly 1/4 of all foreclosure and short sales sold for more than listing price is a clear indication there is more competition in our market. Unsurprisingly, many of these properties selling for more than the list price were Fannie Mae/Freddie Mac owned properties. There were 9 properties that ended up selling for the full listing price. Several of these were short sales where the seller’s lender ended up accepting the listing price. So, in total 21 out of 50 properties sold at or higher than the listing price. When 42% of properties sell for listing price or higher, I believe it is a safe to say a couple of things. The inventory of quality foreclosed and short sale properties is low and there is fairly high competition for these properties.
In the financial news, you hear a lot about the “shadow inventory” of banks. Where they keep the properties from coming on the market for sale to not flood the market with foreclosures, further depressing prices. Eventually they will have to trickle out more properties. I think the time is coming for some of those to start trickle out in our area. It will be interesting to see the increased inventory and if the number of buyers increase in order to remove the added supply of foreclosures and short sales on the market.
Below is a link to the 50 properties that were sold in the Gatlinburg, Pigeon Forge, and Sevierville areas for the study between 2/15/2011 and 3/29/2011.
For a complete list of the current foreclosure cabins and short sale cabins for sale in the Gatlinburg, Pigeon Forge, Wears Valley, Bluff Mountain, Waldens Creek, Sevierville, Pittman Center, and Cosby areas please click the link below:
by Jay Fradd
Smoky Mountain Real Estate Corporation
Cell: (865) 809-8600
Toll Free: (800) 832-1115
Office: (865) 277-8115
Fax: (614) 635-1395 (Ufax)
239 East Parkway
Gatlinburg, TN 37738
TN Real Estate License #313792