Wait, are short sales back? Yes, they are. But let’s unpack what this means and sift through the hype. Also, I have some thoughts about comp selection and VA carnage. I’d love to hear your take in the comments.
UPCOMING SPEAKING GIGS:
3/20/25 HomeSmart iCare Realty
4/2/25 SAFE Credit Union (RSVP here)
4/10/25 Yuba-Sutter Association (details TBA)
4/15/25 Culbertson and Gray (private I think)
4/24/25 KW EDH (private I think)
5/8/25 Private event (details TBA)
5/13/25 PCAR
5/21/25 Grounded Real Estate
6/5/25 Auburn Marketing Meeting
9/26/25 PCAR
11/4/25 SAR Main Meeting
OPTIONS FOR COMPS TODAY
What do we do when there aren’t many comps? I did an exhaustive post a few weeks ago about the struggle of comps in 2025, and here’s a follow-up graphic.
YES, SHORT SALES ARE BACK
Short sales are more common today, but they’re still a tiny sliver of the market (only 0.5% of all local sales in 2025). Basically, there has been an increase from last year, and the level of short sales is back to 2020 levels. Technically we could say short sales increased by 142% from last year, or we could just say there were ten more. It makes sense to see more today since there really isn’t any place to go but up after being almost non-existent. And most importantly, some consumers are feeling inflation, job losses, and economic carnage. My advice? Watch this closely, and be careful about sensationalism.
Do you see the increase? And do you also see where this isn’t earth-shattering breaking news? Here’s a wider annual view from 2012 onward. I’ll add more years if there is demand.
FHA OWNERS ARE STRUGGLING THE MOST
Look, FHA is only about 11% of regional sales, but when looking at the percentage of short sale listings today, FHA represents 58% of those. Keep in mind there are fewer than forty short sale listings total (including pendings), so we’re talking about a tiny amount. Still, it’s important to watch this. Here’s a link to show why FHA borrowers are going delinquent, and it’s clear that economic carnage is the main issue. My observation is many of the short sales happening right now were last purchased in 2022 or 2023.
ARE WE STARTING TO SEE CARNAGE WITH VA?
There has been an increase in national VA foreclosure starts lately since there was a VA foreclosure moratorium in place that has now ended. We don’t know how many of these properties will end up as actual foreclosures, but this is something to watch. When looking at current short sale listings, VA loans represent 16% of those despite being about 4% of sales in recent years (there are only six VA short sale listings).
CHECK ON YOUR PEOPLE WHO PURCHASED IN RECENT YEARS
There aren’t that many short sales, but FHA and VA borrowers are the ones having the hardest time, so check on your people. Pay attention to those who bought around mid-2022 especially since that was the top of the price market locally. Prices aren’t down much from that time, and having negative equity isn’t a huge issue locally, but short sales do still show up. Keep in mind if prices do dip ahead, that would help lead to more short sales.
WHO IS BUYING HOMES TODAY?
Here’s a breakdown of reported buyer financing so far this year (January to mid-March). This is a good reminder that the market isn’t the same in every location and price range. Also, cash isn’t dominating like so many sellers think. I’m excited about this visual, and I hope you dig it too.
CLOSING ADVICE
Watch the distressed portion of the market closely, but be careful about being swept up in hype. Some housing doomers are using a small uptick in distressed stats to paint a crash narrative for the entire market. Look, if the stats support that idea, we should talk about it. There is nothing wrong with prices going down. Just be careful about saying things like, “We’re all going to die and VA loans are going to crash the market” when VA locally only represents 4% of all sales. Know what I’m saying?
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For VA foreclosures, I wonder how many start the process to qualify for VASP vs actually foreclose. All you need to do is not pay for ~3 mos and then request, not a ton of legwork to qualify. Dropping your interest rate down to 2.5% these days seems like a no brainer.
Thanks Miles. I do wonder how these stats will evolve. Are there many that will end in foreclosure? Or is this just a higher number like we saw during the forbearance days (that didn’t lead to any significant change in distressed sales despite the narrative)? Time will tell. Thanks for mentioning VASP.
Thank you as always for your level-headed and thorough dissemination of statistics and trends. Much appreciated Ryan!
Thank you so much, Michael. That’s always the goal. It’s so important to recognize a change in short sales and think about headwinds, but we have to stay grounded here. The narrative can very quickly get out of control.
I like the idea for agents to check in with their clients who purchased at the top of the market with FHA or VA financing. A savvy agent could help their client if they are now struggling.
Totally agree. Thanks Gary.
Thanks for a new real estate dad joke.
Haha. Thanks Joe.