Government REO housing inventories have fallen by a hefty amount from last year, adding to housing’s positive trend in 2012.

By Peter Ricci

According to analysis of government documents, the three big government housing institutes – Fannie Mae, Freddie Mac and the Department of Housing and Urban Development (HUD) – have decreased their REO housing inventory by more than 18 percent from last year.

Based on analysis by the folks at HousingWire, the three housing giants currently own some 202,764 REO properties, a decline of nearly 50,000 from last summer.

Promising REO Statistics

The REO holdings of Fannie, Freddie and HUD differ in number, but one thing is consistent – all have posted impressive declines in the last year.

• Fannie, with 109,266 REOs at the end of 2012’s second quarter, owns the most distressed properties, but that number is down from 135,000 last year. In the second quarter alone, as we reported, it sold nearly 5,000 more REOs than it acquired.
• Of the three, Freddie had the least impressive showing, shedding nearly 8,000 properties and dropping its total inventory to 53,282.
• The best declines, actually, came from HUD, which decreased its REO statistics by 24 percent to just 40,216 properties. As HousingWire notes, though, and as we noted just yesterday, foreclosures have ticked up somewhat at the FHA in 2012, so it will be interesting to see where those numbers are at the end of the third quarter.

The Housing Bottom – Then, Recovery?

As Frank Nothaft, Freddie’s chief economist, noted in a Wednesday report, the number of excess vacant homes for sale in the U.S. has fallen by 30 percent from 2008, and as we’ve noted again and again, balancing inventories will only aid the U.S. housing market as it slowly recovers.

“Less excess vacant stock plus fewer REOs enhances market values,” he said. “Recent data continues to suggest that the bottom in the U.S. house-value cycle may have been reached.”

Sarah Coulter, an @properties agent in Lincoln Park, said that she has not only observed fewer REO properties on the market, but greater demand for those homes.

“While looking for homes with buyers, especially those in lower price points, there is in fact less to see indicating, that the new statistics are right on the money,” she said. “I have noticed that these bank owned/distressed homes are also going under contract more quickly, losing out on opportunities to submit an offer.”

One of her buyers, Coulter continued, actually had to take one extra step to secure a short sale.

“One particular buyer found a short sale the first week on the market and there were already multiple offers – we studied the few comps in the area and submitted an offer higher than list price and secured the deal,” Coulter said.