Zillow: 13% of Baltimore-area homes selling at a loss

Thirteen percent of homeowners who sold in the Baltimore metro area in July let the property go for less money than they paid for it, real estate information site Zillow.com says.

The trend peaked in early 2009 with 15 percent of homeowners selling at a loss. But three years ago, the sales-at-a-loss share was less than half as large as it is now.

In the "could be worse" category: 26 percent -- just over a quarter -- of U.S. homeowners sold at a loss in July, according to Zillow.

These figures don't include foreclosures or resales of foreclosed properties, Zillow says. That would obviously increase the loss number quite a bit. (The analysis also doesn't take into account the transaction costs of selling -- just the price the homeowners accepted from the buyer vs. what they paid to the previous seller.)

Zillow doesn't mention short sales one way or another, but I'm guessing that's a big piece of the story. These homes sell for less than the amount due on the mortgage, with bank approval. It's the lender rather than the borrower shouldering the loss, unless the lender decides to seek a deficiency judgment for the difference. (Either way, the borrower leaves with damaged credit, so there is a financial hit involved.)

By Zillow's calculation, some communities are seeing a lot more sales at a loss than others.

In Baltimore, for instance, 19 percent of home sales in July were losses. At the other extreme is Arnold in Anne Arundel County, where 3 percent of homes sold at a loss, Zillow says.

Ellicott City and Columbia might collectively be No. 2 on Money Magazine's "best places to live" list, but about 14 percent of July home sellers in both communities sold for less than their purchase prices.

Zillow's new report has a variety of other statistics, from its "Zestimate"-fueled home value index to list price per square foot. But what caught my eye was its calculation of the share of homes sold.

Four years ago, the Baltimore metro area had just finished a 12-month period during which 7.7 percent of all homes in the region had changed hands. That was higher even than the nation.

Fast-forward to August 2008. The 12-month tally had sunk to under 2 percent in the metro area, below the national average.

Now? About 3.7 percent of all homes in the Baltimore metro area changed hands in the past 12 months, Zillow says -- same as the U.S. overall.

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