More Single Family Homes Turned Into Rentals.

More Single Family Homes Turned Into Rentals

As the number of for-sale homes listed on the multiple listing service (MLS) drops, the number of single family homes up for rent has been gradually increasing, RISMedia reports.

Single family home rentals are a growing business, as more investors buy up foreclosures at bargain prices and then transform them into rentals.

About 16 percent of all listings on the MLS are rentals, which is more than double the number of rentals listed in 2006, RISMedia reports. Single family rentals are often listed on the MLS by real estate brokers, whereas multifamily units typically aren’t.

The single family rental market now accounts for “21 million rental units or 52 percent of the entire residential rental market,” according to a new study by CoreLogic.

Single family rentals are usually very differently from multi-family homes. For example, rents for single-family rentals typically are 1.5 to 1.6 times higher than multifamily homes. Also, families and prior home owners tend to be attracted to single-family rentals whereas multifamily tenants tend to be younger, more mobile people who have never owned a home before.

Many of the single family rental tenants nowadays are former home owners who had faced foreclosure and can no longer afford to own. According to CoreLogic, more than 3 million home owners have been turned into renters over the past five years due to foreclosure.

Source: “Single Family Rentals Now Exceed Multifamily,” RISMedia (April 23, 2012)

Short Sales Start to Outpace Foreclosures.

Short Sales Start to Outpace Foreclosures

Banks are agreeing to more short sales, and for the first time,  short sale transactions are exceeding foreclosure deals, according to the most recent housing data from Lender Processing Services (LPS) Inc.

In January, short sales made up 23.9 percent of home purchases, according to LPS. Meanwhile, foreclosures made up 19.7 percent of sales.

Just one year prior, foreclosures made up the bulk at 24.9 percent of transactions while short sales made up 16.3 percent.

“It’s a fairly recent phenomenon that short sales have been increasing,” Jonathon Weiner, a vice president with LPS, told Bloomberg News.

So why are banks getting more agreeable to short sales?

Banks are realizing that short sale transactions usually sell for higher prices than foreclosures. In fact, foreclosed homes tend to sell for 29 percent less, on average, than comparable non-distressed properties. Short sales tend to sell at a 23 percent discount, according to Lending Processing Services data from January.

Banks and government agencies in recent weeks have taken steps to speed up the short sale process, setting new timelines for how long mortgage servicers have to respond to short sales offers. Also, some banks, such as Wells Fargo and JPMorgan Chase, are even offering some home owners cash incentives — up to $35,000 — if they agree to do a short sale instead of let the home fall into foreclosure.

Source: “Short Sales Surpass Foreclosures as Banks Agree to Deals,” Bloomberg News (April 17, 2012)