Some recent statistics I reviewed are pretty telling of the current real estate market and provide some good comparisons of foreclosure and depressed home sales from Spring of last year to Spring of this year.
Foreclosures accounted for about one-third (31%) of all home sales this spring. Even though that’s a smaller share of sales from the prior quarter, it’s still six times the percentage of foreclosures in a typical housing market. Moreover, this number would have likely been much larger if not for the investigations of faulty paperwork by banks and mortgage servicers. This has caused many banks to delay foreclosure sales and once complete we will likely see a flood of foreclosures as the year comes to an end. In all, 265,087 homes sold in the second quarter were in some stage of foreclosure or owned by banks. This is a decrease of 11 percent from the same period last year.
Bank-owned homes (which are sold after being repossessed) made up nearly 19 percent of all sales. This particular statistic was not a change from the previous quarter. Notably, distressed properties (often in need of repair) typically sell at big discounts and weaken prices for neighboring homes. One such home sold this spring for 40 percent less than the average price of other homes, up from 36 percent in the previous quarter and 34 percent from the same quarter a year ago.
Sales of homes in the foreclosure process or short sales sold for 21 percent less than the average home which is up from an average of 17 percent in the first quarter and 14 percent in the second quarter of 2010. A short sale is when the lender agrees to accept less than what is owed on the mortgage.
Prices: the average sales price of a foreclosure property was $164,217, down less than 1 percent from the January-March quarter and nearly 5 percent from the April-June quarter in 2010.
Nevada led all states with foreclosure sales, accounting for 65 percent of all home sales. And in Arizona, foreclosure sales represented 57 percent of all home sales for the quarter, up 16 percent from a year ago.
So even though I hear and read differing scenarios on the economy and real estate, it would appear overall that distressed property is still a significant portion of the real estate industry and likely will be so for some time.
