I recently read a brief article on how home sales appear to be improving nationwide. There is no doubt that this has been the case in the Hilton Head and Bluffton Real Estate Markets. In fact, during two of the historically mediocre selling months of July and August in the Hilton Head/Bluffton markets, we’ve witnessed a considerable increase in sales activity in our MLS. Certainly buyers are responding to very attractive pricing levels, but the high level of interest in the category of distressed properties (Foreclosures or Short Sales) are absolutely adding to the increased demand. In the Hilton Head Multiple Listing Service, During the month of July in 2009, our area closed 138 homes. Exactly 27.5% of the closed homes were either Foreclosure or Short Sale. Some areas of our market are between 35% and 40%. I believe that the increase in foreclosures is attributable to one main factor. Earlier in the year there was a moratorium on Foreclosures due to new Federal guidelines that the banks needed to adhere to. Per the new guidelines, banks needed to assure that the homeowner did not meet the requirements for a possible loan modification. Sadly, many homeowners simply did not qualify and the foreclosure process was started. Clearing out the distressed properties is going to be the first step to our Real Estate market improving. For the average seller, it is nearly impossible to compete with the foreclosure sales. To begin seeing a marked improvement in pricing we have a long way to go. Here is a copy of the article that I recently read courtesy of Recesssion.org After a shocking 40% plunge in U.S. home sales during 2007, statistics are now showing a 7% rise in sales for 2008 largely driven by the sale of foreclosed homes. These "Motivated Sales" or foreclosed/distressed houses sold at the auction block or by financial institutions increased by an astounding 177% last year while all other home sales fell another 17%. The sale of these distressed assets represented as much as a third of all sales activity in the United States during 2008. Not surprisingly, the biggest sales gains were in areas with the largest annual price declines: California, Nevada, Arizona and Florida. In California especially, these sales accounted for 47% of total sales in December, up from 23 percent a year earlier. Obama's $275 billion home stability program should provide some support during the worst housing market downturn since the Great Depression, though it is extremely unlikely a turnaround will be swift. The home stability program aims to reduce the rate of new foreclosures and also reduce current mortgage rates for those who cannot afford them. Still there are three major issues preventing any sort of housing recovery: the growing oversupply of unsold homes, a credit crunch resulting in increasingly restrictive access to mortgage credit and non-distressed home sellers asked to slash their asking prices. As access to financed mortgage money remains limited, lenders are being battered by record foreclosure rates and house prices are unlikely to rise before the supply imbalance improves.