Posts by Chris Bowden
Chris Bowden is Senior Vice President of HomeSteps®, the real estate sales division of Freddie Mac. He is responsible for overseeing the management and disposition of the national portfolio of single-family homes Freddie Mac acquires through foreclosure. HomeSteps® is headquartered in Freddie Mac's Southwest Regional Office in Dallas, Texas.
The good news for today's homebuyers is that we've gone back to a more traditional market, after being dominated by investors and cash sales for several years. Nearly 68 percent of homes sales are to individual buyers today, compared to 53 percent in 2011 when investor/cash sales reached their peak.
Real estate owned (REO) homes – ones that have gone through the foreclosure process and are owned by a bank or other institution – accounted for more than six percent of home sales in May 2015. While REO inventory is down significantly from its peak during the recent housing crisis, there continues to be affordable buying opportunities for homebuyers nationwide – especially with today's low mortgage rates.
There's a reason multiple offers on foreclosed homes are becoming so common in so many markets. Buyer demand is colliding with shrinking supplies of foreclosed (REO) homes. During the second quarter, HomeSteps, Freddie Mac’s real estate sales unit, sold nearly two homes for every one we took in.
Owner-occupants buy about two-thirds of the foreclosed homes sold by HomeSteps®, Freddie Mac's REO sales unit. That's an average we shoot for because we believe a strong emphasis on selling to owner-occupants can help stabilize communities and local home prices. But as the housing recovery took hold, it became a challenge to maintain that average. Fewer REO homes were going on the market. Buyers looking for a house to live in began losing ground to well-heeled investors looking for single-family homes they could rent.
HomeSteps, Freddie Mac's REO sales division, sold more REO than it took in during the second quarter and continued to reduce its national inventory of foreclosed homes. Specifically, as the chart below shows, sales outpaced acquisitions by 6,041 homes and the inventory fell to 53,282 at the end of the second quarter.