The Atlanta Journal Constitution’s J. Scott Trubey recently reported that metro Atlanta foreclosure discounts are narrowing. The real estate website Zillow reported last week that foreclosed homes are no longer the great deals they once were in and around Atlanta. Bad news for investors or home buyers with limited budgets maybe, but definitely news that’s in keeping with reports of the metro area’s housing market improving.
Zillow reported that the median discount on foreclosures in September was only about 8 percent from market value both in the metro area. Nationwide, the percentage is similar. At the peak in 2008, the discount on foreclosures in metro Atlanta was 28 percent. That was a pretty steep discount compared to national discount of 24 percent at its peak in 2009.
Trubey reports, “Distressed borrowers and banks are now more often coming to terms on loan modifications and other alternatives to foreclosure, reducing the supply of distressed homes, said Jude Rasmus, president and CEO of Rasmus Real Estate Group, a top brokerage of foreclosures. Foreclosures are more often netting multiple bids, both from major investors and regular home buyers, she said.”
Although home prices in metro Atlanta are still below their 2000 levels, home values rose in 2012. A report released last month showed August was the fifth straight month of increased home prices in the metro area.
As Trubey explains Zillow’s calculations and comparisons, “Instead of comparing the median sales price of foreclosures to the median sales price of nonforeclosures, Zillow compared foreclosure prices to an estimated fair market resale price for the properties.” Based on strictly median sales price, the metro Atlanta foreclosure discount was 56.5 percent. Truby also reported, “Zillow said that such an analysis isn’t a fair comparison, as foreclosures often have different attributes than the average house and that lower priced homes are more likely to be in foreclosure.”