Distress sales now define Orlando's still-slumping home market: Two-thirds of all real estate closings in the metro area's core market are either bank-owned foreclosures or lender-approved short sales.
A report released last week by real-estate-research company RealtyTrac Inc. showed that the number of houses repossessed by banks last month in Metro Orlando was 1,094 — up 56 percent from November.
In desirable areas, such as Windermere and Baldwin Park, homeowners are much more likely to salvage their credit record by getting their bank to approve a short sale, which allows them to sell their house for less than they owe on the mortgage. In high-poverty areas that attract fewer buyers, most financially strapped owners have no such option, so when banks foreclose on them, their credit is damaged for years.
An analysis by the Orlando Sentinel of fourth-quarter distress sales throughout Orange County found that about 80 percent of them were foreclosures in ZIP codes with disproportionately high numbers of renters and large numbers of families living below the poverty level — mostly black or Hispanic neighborhoods such as Pine Hills, Washington Shores and the Oak Ridge Road area
In communities such as Windermere, Baldwin Park and Waterford Lakes, which are mostly white areas with little poverty and few renters, homeowners were more likely to avoid foreclosure. Only about 50 percent of the distress sales there were foreclosures. The other half qualified for short sales by showing evidence of hardship, such as a job loss, illness or death in the family.
Not only can those homeowners emerge from short sales with their credit relatively intact, their neighborhoods stand to recover more quickly because short-sale prices are typically higher than those of foreclosed properties.
Five years ago, foreclosures may have carried more weight, but now they're increasingly common.