As the year comes to a close, we reached out to FORCE agents across the country to see what they anticipate in the REO market for the year ahead.
FORCE agents are expecting an increase in business in 2016. Many expect plentiful REO inventory in the New Year. Foreclosure inventory has been on the decline, but it remains elevated. Black Knight Financial Services recently reported foreclosure inventory to be 2.5 times normal levels. Not only are there more foreclosures in the works, but also some areas of the country have not worked through their existing REO inventory.
Outlook on demand is mixed, with some agents encountering multiple offers on their properties and others finding only “moderate” demand bolstered somewhat by investors.
Here’s a look at FORCE agent predictions across the country:
Marie Kahvajian; Fast Track Properties; Upper Saddle River, New Jersey
“New Jersey is one of the states where the REO market was held back. Like some of the other states in the Northeast, we are really just getting into our REO market, so for the next few years, we are going to have a lot of REOs. Whereas other areas of the country have already worked through their REOs, we’re just getting into ours.”
Nilda Olvera; Home Sales Realty, Inc.; Chicago, Illinois
“For the New Year, I expect prosperity as far as the real estate market. For REOs, I expect that there will be more at the rate they’re going now. REOs are becoming more expensive now. I have two listings I’m hoping to put up on luxury home sites. Also, prices for traditional homes are rising. There is some increase in demand.”
James Roberts; WNY Metro Roberts Realty; Buffalo, New York
“Our market has never been hotter with REOs, which is a little different than most of the country. Our REOs are through the roof. Most of the properties have been sitting for so long that they have to become cash, and most go to investors. Right now, REO buyers are about 75 percent investors and 25 percent owner occupants. Many assets have been sitting for two to three years. Our market is traditionally a very stable market with not much fluctuation in prices. At our office, which is a multi-service office that does REOs, appraisals, and property preservation, we are getting multiple offers on most properties.”
Kevin Berman; Bankers Realty services; Fort Lauderdale, Florida
“We’re busier than we’ve ever been, and I’ve been doing this for quite a while—way before 2006-2007 when it started to pick up. I don’t know if that’s because of my experience or because a lot of zombie foreclosures have started to resume again. If you listen to the news, I’m expecting that that will only continue for a little bit and then drop off midway through next year. I just listened to Yellen say bad debt is under control, but I’m not sure I’m seeing that.
I’ve seen demand higher than it is right now. It’s moderate, but it has definitely plateaued, as have values. Demand from end users is not really that strong, only in certain areas and neighborhoods. Investor demand is strong, but they want very competitive pricing. Another thing we’re seeing is a lot of investors submitting hundreds of offers for properties and then going through and weeding out what they don’t want. You have to spend a lot of time qualifying offers.”
Rebecca Casey; Rebecca Casey Realm Properties; Pearland, Texas
“We have seen an uptick on the REO side of our business, so we’re assuming that it will continue to get back to closer to where it was. I’ve been listing for eight years, and we’ve been listing about 100 per year. Then it dropped off, but it has picked up for the past 3 months. I think it will continue increasing. I think that the property values will continue to increase for 2016. I don’t see them going down, and I don’t see them leveling off. We are going to have a lot of buyers in the market. Every property we list has multiple offers, and that will continue.”