The conventional wisdom is that foreclosed houses sell better than the rest of the market.  Does that hold true in Austin?  Yes, it certainly does.  I decided to find out exactly how by taking a look at the MLS data (from the Austin Board of Realtors/ACTRIS).  I examined sold properties from January 1, 2010 to May 31, 2010 as well as properties that are currently active and pending.

Throughout the MLS, 13.64% of the 8,629 properties that sold were foreclosures.  The foreclosures took an average of 41 days to sell while the non-foreclosures averaged a month more at 72 days - a whopping 75% longer.  The numbers for properties currently pending are quite similar with 13.37% of those being foreclosures.  The average foreclosure market time was 40 days compared to 71 for non-foreclosures.

The change in numbers is intesting for homes that are currently for sale (active).  Only 4.05% of the homes on the market are foreclosures.  Non-foreclosure days on market are 48% higher than foreclosures (98 days versus 66 days).

We can also examine the sales price to list price ratio and the sales price to original list price ratio to learn some more.  The sales price to list price ratio compares the sales price to the list price on the house at the time of the contract.  The banks sold their houses for 97.52% of their list price while the rest of the market was at 96.91%.  However, when looking at the sales price to original list price ratio, the banks are at 93.16% compared to 94.47% for the rest of the market.  This indicates that the banks are more likely to drop the price in an effort to get a contract, especially when you consider that their houses sell so much faster.

Finally, the foreclosures are skewed to the lower side of the market.  As a result, these homes are within the budgets of more home buyers and are also attractive to investors which helps them sell faster.  While some of the price difference can be explained away in condition and banks willingness to sell for less to move the house quickly, I don't believe that makes up the whole spread - the remainder is simply that more lower-end homes are foreclosed upon.  The median sales price of a foreclosure house through the area covered by the MLS was $117,000 while the median price for a non-foreclosure house was $194,000.  For pendings, the numbers are $115,950 versus $205,395.  For actives, the foreclosures median price is $139,900 and non-foreclosure is $239,750.

While foreclosures can be a great opportunity, keep in mind that not all foreclosures are great buys and not all great buys are foreclosures.  It is good to keep an open mind and look at the options available to you across the market spectrum.  With that said, here is a link to the foreclosures available in the Austin area.  If you would like to purchase a home in which to live or are ready to start owning investment property, today's low interest rates are a great reason to buy soon.  You can reach me via email, online form, or at 512-735-7200.