What is Causing the Decline in Short Sales?

Is Housing Facing a “Short Sale Cliff?
Throughout late 2012 and into 2013, short sales had been steadily declining, due in part to rising home prices pulling homeowners into positive equity.  While two data points do not make a trend, this negative trajectory appears to have picked up pace in 2014 with short sales dropping 0.6 percentage points from 5.2 percent of total sales in December 2013 to 4.6 percent in January 2014. The preliminary February data, keeping in mind that it is preliminary and subject to revisions, shows a potentially dramatic drop to 2.2 percent. Meanwhile, the REO-sales share has not declined in the same way, moving instead in accordance with the normal seasonal pattern. This implies that while home price appreciation and other factors have contributed to the decline in short sales, the expiration of the Mortgage Forgiveness Debt Relief Act could be having an impact, Read more.