Short Sales Hit 3 Year High, Foreclosures in California Account for 47% of Sales
RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, released its Q1 2012 U.S. Foreclosure Sales Report™, which shows that sales of homes that were in some stage of foreclosure or bank owned accounted for 26 percent of all U.S. residential sales during the first quarter — up from 22 percent of all sales in the fourth quarter and up from 25 percent of all sales in the first quarter of 2011.
Third parties purchased a total of 233,299 residential properties in some stage of pre-foreclosure (defaults and scheduled foreclosure auctions) or bank-owned (REO) during the first quarter, an increase of 8 percent from the previous quarter and virtually unchanged from the first quarter of 2011.
The average sales price of homes in foreclosure or bank owned was $161,214 in the first quarter, down 1 percent from the previous quarter and down 2 percent from the first quarter of 2011. That average sales price was 27 percent below the average sales price of homes not in foreclosure or bank-owned during the quarter — matching a 27 percent foreclosure discount in the previous quarter but down from a 29 percent foreclosure discount in the first quarter of 2011.
“Foreclosure-related sales picked up in the first quarter, particularly pre-foreclosure sales where a distressed homeowner is selling to avoid foreclosure — typically via short sale,” said Brandon Moore, chief executive officer of RealtyTrac.
- “Those pre-foreclosure sales hit a three-year high in the first quarter even as the average pre-foreclosure sales price dropped to a record low for our report. Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions.
“Meanwhile the average price of a bank-owned home is stabilizing and even increasing in some areas where a slowdown in REO activity over the past year has resulted in a restricted supply of REO homes available,” Moore continued. “Still, REO sales did increase on a quarterly basis in 21 states, indicating that lenders are still working through a bottleneck of unsold REO inventory in many areas.”
Pre-foreclosure sales increase 25 percent from year ago
Third parties purchased a total of 109,521 pre-foreclosure homes — in default or scheduled for auction — during the first quarter, an increase of 16 percent from the previous quarter and an increase of 25 percent from the first quarter of 2011. First quarter pre-foreclosure sales were at their highest quarterly level since the first quarter of 2009. Pre-foreclosure sales accounted for 12 percent of all sales during the first quarter, up from 10 percent of all sales in the previous quarter and 9 percent of all sales in the first quarter of 2011.
Pre-foreclosure homes, which are often sold via short sale, sold for an average price of $175,461 in the first quarter, down 4 percent from the previous quarter and down 10 percent from the first quarter of 2011. The average pre-foreclosure sales price in the first quarter was the lowest quarterly average pre-foreclosure sales price in the history of the RealtyTrac foreclosure sales report, which tracks foreclosure sales back to the first quarter of 2005.
The average sales price of a pre-foreclosure home in the first quarter was 21 percent below the average price of a non-foreclosure home, up from a 19 percent discount in the fourth quarter and a 16 percent discount in the first quarter of 2011.
Pre-foreclosure homes that sold in the first quarter took an average of 306 days to sell after starting the foreclosure process, down from an average of 308 days in the previous quarter but still up from an average of 256 days in the first quarter of 2011.
REO sales decrease 15 percent from year ago
Third parties purchased a total of 123,778 bank-owned (REO) homes in the first quarter, up 2 percent from the previous quarter but down 15 percent from the first quarter of 2011. REO sales accounted for 14 percent of all sales in the first quarter, up from 13 percent of all sales in the previous quarter but down from 15 percent of all sales in the first quarter of 2011.
Twenty-one states posted a quarterly increase in REO sales, including Oregon (41 percent), North Carolina (23 percent), Ohio (21 percent), Florida (13 percent) and Wisconsin (13 percent).
REOs sold for an average price of $147,995 in the first quarter, down less than 1 percent from the previous quarter and up 2 percent from the first quarter of 2011.
- The average sales price of a bank-owned home in the first quarter was 33 percent below the average sales price of a non-foreclosure home, down from a 34 percent discount in the fourth quarter and a 37 percent discount in the first quarter of 2011.
REOs that sold in the first quarter took an average of 178 days to sell after completing the foreclosure process, up from 175 days in the fourth quarter and 176 days in the first quarter of 2011.
California, Nevada, Georgia post highest percentage of foreclosure sales
California foreclosure-related sales accounted for 47 percent of the state’s total residential property sales in the first quarter, the second-highest percentage among the states. The average price of a foreclosure-related sale in California was $235,042 during the first quarter, an increase of less than 1 percent from the previous quarter and down 4 percent from the first quarter of 2011.
Foreclosure sales accounted for 56 percent of all residential sales in Nevada in the first quarter, the highest percentage of any state. The average price of a foreclosure-related sale in Nevada during the first quarter was $116,695, nearly identical to the average price in the previous quarter but down 5 percent from the first quarter of 2011.
Foreclosure sales accounted for 46 percent of all residential sales in Georgia during the first quarter, the third highest percentage of any state. The average price of a foreclosure-related sale in Georgia during the first quarter was $103,909, down 3 percent from the previous quarter and down 10 percent from the first quarter of 2011.
Other states where foreclosure-related sales accounted for at least one in four sales in the first quarter were Arizona (40 percent), Michigan (39 percent), Illinois (31 percent), Colorado (30 percent), Wisconsin (28 percent), Oregon (27 percent), Minnesota (27 percent), Washington (26 percent), and New Hampshire (26 percent).
Major Metro Trends
Among the nation’s 20 largest metropolitan statistical areas, those with the biggest annual increases in pre-foreclosure sales were Atlanta (78 percent), Detroit (75 percent), San Antonio (74 percent), Sacramento (70 percent), and Dallas (69 percent).
Metro areas with the biggest annual increases in REO sales were Minneapolis (33 percent), Boston (30 percent), Philadelphia (22 percent), Atlanta (15 percent), and Chicago (13 percent).
Glossary of Terms
- Foreclosure (FC) sale:a sale of a property that occurs while the property is actively in some stage of foreclosure (NOD, LIS, NTS, NFS or REO). This includes only sales to third-party buyers or investors. It does not include property transfers from the owner in default to the foreclosing bank or lender.
- REO sale: a sale of a property that occurs while the property is actively bank owned (REO).
- Pre-foreclosure sale: a sale of a property that occurs while the property is actively in default (NOD, LIS) or scheduled for foreclosure auction (NTS, NFS).
- Pct. of all sales: total number of Foreclosure Sales (or Pre-Foreclosure Sales or REO Sales) as a percentage of all residential sales during the quarter or year.
- Avg. FC sales price: the average sales price of Foreclosure Sales (including both Pre-Foreclosure Sales and REO Sales) during the quarter or year, excluding sales with no sales price.
- Avg. FC discount: the percentage difference between the average sales price of foreclosure sales and the average sales price of non-foreclosure sales during the quarter or year.
- Avg. REO discount: the percentage difference between the average sales price of REO sales and the average sales price of non-foreclosure sales during the quarter or year.
- Avg. pre-foreclosure discount: the percentage difference between the average sales price of pre-foreclosure sales and the average sales price of non-foreclosure sales during the quarter or year.
Report methodology
The RealtyTrac U.S. Foreclosure Sales Report is produced by matching national address-level arms-length sales deed data against RealtyTrac’s foreclosure database of pre-foreclosure (NOD, LIS), auction (NTS, NFS) and bank-owned (REO) properties. A property is considered a foreclosure sale if a sales deed is recorded for the property while it was actively in some stage of foreclosure or bank-owned. Previous quarterly numbers may be revised upon the issuance of a new quarterly foreclosure sales report because of new sales deed data received by RealtyTrac. The foreclosure discount is calculated by comparing the percentage difference between the average sales price of properties not in foreclosure to the average sales price of properties in some stage of foreclosure or bank-owned. States without sufficient foreclosure sales data to calculate average prices are not included in the report.
