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Nearly one out of every three homes sold in Monroe County last year were either foreclosures or short sales.

Together, they sunk the average selling price of Pocono homes by more than 11 percent.

And things were not any rosier in the new year: Prices last month fell even further, by an another $1,500.

Foreclosures are glutting the market with bargain-priced homes as banks seek to rid themselves of large inventories of properties they repossessed.

The sub-prime mortgage crisis, where lenders made loans to high-risk borrowers at a premium, was at the root of the glut. It flooded the market with foreclosed homes as ordinarily unqualified borrowers found they couldn’t pay their mortgages.

That, along with an economic slowdown, in part fueled by the housing crash, added to the stockpile of foreclosures on the market.

Foreclosures sell for less because of both their lack of maintenance and a rush by the bank to dispose of these unwanted assets.

Impact on prices

Home sales were up by 1 percent in Monroe County last year, and down 4 percent in Pike. Yet sales of foreclosures were up 2 percent in Monroe and 18 percent in Pike.

But distressed sales brought down the values of Pocono homes substantially last year.

The average Monroe County foreclosed home sold for $86,477 less than the average non-foreclosed home during 2011. In Pike, the difference was even greater — $94,912.

Foreclosed homes sell for less because they are usually in poorer condition than other homes.

Foreclosed homes are often abandoned and poorly maintained. Sometimes the homes are vandalized or stripped of appliances and finishings before the owners vacate.

The downward pressure on home values was across the board, whether it be large or small homes.

In fact, homes with three or more bedrooms had a slightly higher rate of foreclosure than homes with less than three bedrooms, according to Pocono Mountain Association of Realtors figures.

Short sales

The average price of a home sold in Monroe County dropped by 6 percent last year, from $163,964 in 2010 to $153,867.

It was worse in Pike, with prices dropping by 9 percent, from $187,009 in 2010 to $169,411, according to Pike/Wayne Association of Realtors figures.

Meanwhile, foreclosures sold for about half the price of non-foreclosures.

A non-foreclosed home in the two counties sold for an average of $183,109. Foreclosed homes for the combined counties went for an average of $93,414.

“Foreclosures and short sales are affecting the sales prices because other sellers have to compete with those prices,” said Eileen Chaladoff, president of the Pocono Mountains Association of Realtors. “A home is only worth what you can sell it for, what the market will bear.”

Short sales

While foreclosure sales grew slightly in Monroe during 2011, short sales more than doubled.

A short sale is when a home is sold for less than the mortgage balance due. It’s a compromise between the lender and the homeowner, a new reality after years of falling home values and rising foreclosures.

“The banks are working a little better, which saves them lots of money,” Chaladoff said. “The average foreclosure costs a bank more than $75,000 because of evictions and other court proceedings.”

There were 33 short sales in Monroe County during 2011 compared with 14 in 2010, according to the Pocono Mountains Association of Realtors. Pike County had three in 2010 and five in 2011.

Short sales involve a drastically reduced selling price to get a quick sale or quick offer.

“That brings down the values of other homes,” Chaladoff said. “But the positive thing about that is people are staying in their homes and maintaining them instead of abandoning them. So it’s good for the neighborhood.”

Foreclosure sales rise

Non-foreclosed home sales aren’t making up the difference in sales prices.

Sales of non-foreclosed homes were flat in Monroe, and fell by more than 9 percent in Pike.

In Pike, foreclosures accounted for 24 percent of home sales in 2011. In 2008, at the beginning of the housing crash, foreclosures were just 15 percent.

In Monroe, foreclosures accounted for 28 percent of home sales in 2011.

That number is relatively unchanged since 2008. But in the preceding year, before the housing collapse, foreclosures accounted for just 16 percent of sales.

New trend

But while prices plummeted, financial pragmatism may have given rise to a new trend that could slow home devaluation in coming years.

Lenders’ willingness to work more closely with sellers of distressed homes may be responsible for Monroe County’s sharp drop in new foreclosure filings in 2011.

New foreclosure filings fell 37 percent last year compared with the previous year.

“I’m estimating that we are probably not halfway through the real estate problem,” said Linda Gerkensmeyer, a certified housing counselor from Tannersville.

“Baby boomers are just starting to retire, and many have lost much of their savings after the downturn in the market. So, they are going into retirement with an inability to sustain housing,” Gerkensmeyer said. “And with the continued increase in gas, we are not attracting the commuters as we used to.”

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