By Mike Colpitts
Nearly half of all U.S. home sales are now either foreclosures or bank-assisted short sales, according to 
the Campbell Inside Mortgage Finance survey taken monthly. Distress sales composed 48.6% of sales in March.
The survey polls more than 3,000 real estate agents and brokers monthly. The latest poll also found that buyer demand among traditional buyers and investors is waning as the usually busy spring buying season rolls into gear. High unemployment and weak consumer confidence over the troubled national economy hamper housing markets.
However, short sales also showed an increase during the month, according to results of the survey, composing 19.6% of home sales. The increase is a positive sign for the housing market as bankers and bank servicing companies cooperate with sellers to reach agreements over selling homes that owners owe more on than mortgage holders can presently get in the current marketplace.
The issue is particularly important in light of a credit industry study that showed mortgage holders credit scores are not aided or improved through doing a short sale as compared to under going a foreclosure as industry officials have previously said.
Higher gas prices with consumers paying upward of $4.00 a gallon in many regions of the country and spring storms rolling through the mid-section of the country also hamper higher home sales from developing. Home values are declining in most of the US, despite near record low mortgage rates. But more buyers made home purchases in March, rising 3.7% from the previous month, according to the National Association of Realtors, which pegged home sales at an annual rate of 5.1-million units.
A large number of real estate agents said that appraisal problems are causing issues with many sales that are attempting to obtain mortgage financing. As required by Freddie Mac and Fannie Mae guidelines, appraisers use the last sale in an area as a comparable property, and many of those sales are of foreclosed properties, damaging the value of homes and other properties being sold.
Appraisal standards are likely to be revised further by the Dodd-Frank Financial Reform Act currently under debate in Congress. Appraisers have received heavy criticism as a result of questionable appraisal practices during the real estate bubble that inflated property values, especially appraisers that worked for or under contract to defunct Countrywide Home Mortgage.