By Jim Droz
Processing delays are taking a toll on first-time home buyer interest in short sales, which now account for more than one of every six house sales, according to an Inside Mortgage Finance tracking survey.
First-time home buyer purchases of short sales dropped to 39.7 percent of short sale transactions in August. That represented a three-month slide and was the lowest level for first-time home buyers ever recorded by the survey.
The first-time home buyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009, just before the originally-scheduled expiration of the federal homebuyer tax credit.
Short sales are just one type of distressed property, with damaged REO and move-in ready REO also being significant components of today’s housing market. In August, short sales accounted for 17.1 percent of the home purchase market, with damaged REO and move-in ready REO accounting for 13.2 percent and 15.6 percent, respectively.
Real estate agents responding to the August survey indicated that home buyers frustrated with short sale delays are resorting to placing offers on multiple properties, with the intention on closing on only one. This practice can bog down the short sale approval process with many mortgage lenders.