REO activity bright spot in housing market

Overall home prices fell 1 percent at the end of April on an annual basis, but increased activity in the real estate-owned properties sector is believed to be a silver lining to this trend.

Overall home prices fell 1 percent at the end of April on an annual basis, but increased activity in the real estate-owned properties sector is believed to be a silver lining to this trend.

According to real estate data from Clear Capital, despite the overall decline, the price of REO homes rose 5.5 percent, as the share of the sales of these homes inched higher.

"Home prices continue to show relative strength in April with virtually no change over the short term and tapering losses over the longer term," said Clear Capital director of research and analytics Alex Villacorta.

REO home sales accounted for roughly 27.9 percent of all transactions in April, marking the third straight month of gains. In addition, the saturation rate of these homes in the national property inventory increased to 27.9 percent last month, up from 25.3 percent at the end of 2011.

Experts believe the rising sales rate of the these homes is a result of increased activity among investors. A number of these buyers capitalize on the bargain prices of foreclosed houses and short sales and then resell them for a profit or convert them into affordable rental properties.



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