Though in past they have been a drag on local home values, foreclosures and short sales actually are now rising in price so much faster than normal homes that they are driving up price increases and pulling normal homes with them.
In a reversal of their traditional relationships, since at least April distress sales (REOs and short sales) have been driving the price recovery on a national level, according to the latest home price data from CoreLogic.
April home prices nationwide, including distressed sales, increased 12.1 percent on a year-over-year basis in April compared to April 2012. On a month-over-month basis, including distressed sales, home prices increased by 3.2 percent in April compared to March.
However, excluding distress sales, prices rose only 11.9 percent in April year-over-year basis compared to April 2012. On a month-over-month basis, excluding distressed sales, home prices increased 3 percent in April compared to March.
Distress sales outpaced normal homes by an even greater margin in May, according to CoreLogic’s monthly price report released today. The gap between year-over-year national price increases without and with distress sales grew from .2 percent in April to .6 percent in May.
Home prices nationwide, including distressed sales, increased 12.2 percent on a year-over-year basis in May compared to May 2012, a slight increase over April. This change represents the biggest year-over-year increase since February 2006 and the 15th consecutive monthly increase in home prices nationally. On a month-over-month basis, including distressed sales, home prices increased by 2.6 percent in May compared to April.
REOs and Short Sales Drive up Prices | RealEstateEconomyWatch.com.