Nearly one million properties that were
either bank-owned (REO) or in some stage of foreclosure sold to new owners in
2012 according to RealtyTrac's year-end report.
The short sale portion of distressed sales continued to increase while
REO sales declined.
There were 498,122 REO residential
properties sold to third parties in 2012, a 15 percent decrease from 2011 and
down 19 percent from 2010. These sales
accounted for 11 percent of the residential market compared to 13 percent and
16 percent of the two prior years. Third
parties bought 449,873 houses that were in pre-foreclosure status (primarily
short sales in which the lender took less to release its lien than the balance
of the mortgage), a six percent increase from 2011 and nearly equaling the
record number of 454,111 pre-foreclosure sales in 2010. The
combined total of 947,995 distressed properties (6 percent fewer than the prior
year) that sold in 2012 constituted 21 percent of the residential sales market
compared to 23 percent in 2011 and 28 percent in 2010.
In addition RealtyTrac said that 22
percent of residential sales during the year were of properties that sold as
short sales but were not in foreclosure.
The company did not explain how they arrived at this number but said
that this brought the market share of distressed properties to 43 percent and
that these sales increased by 4 percent year-over-year.
Pre-foreclosure sales in 2012
increased from the previous year in 28 states while, despite declining
nationwide, REO sales increased from the previous year in 26 states. Pre-foreclosures
outnumbered REO sales in 12 states.
The third category, non-foreclosure
short sales, accelerated throughout the year, increasing each quarter from the
previous one. Fourth quarter
non-foreclosure short sales increased 2 percent from the third quarter and were
up 17 percent from the fourth quarter of 2011, reaching a seven-quarter high. These sales in 2012 sold short of the loan
amount by an average of $81,621, down from an average of $87,809 in 2011.
In the fourth quarter of 2012,
residential properties in foreclosure or bank-owned sold for an average price
of $171,704, an increase of 2 percent from the third quarter and an increase of
4 percent from the fourth quarter of 2011. Pre-foreclosure sales were at an
average price of $190,031, 23 percent below the average price of a
non-distressed property compared to a 26 percent discount the previous quarter
and 17 percent one year earlier. Properties
in the foreclosure process that sold as short sales in 2012 were $129,817
"short" of the loan amount.
REO properties sold for an average
price of $151,998, up 1 percent from the previous quarter and 3 percent from
the fourth quarter of 2011. This was an average discount of 39 percent from the
market price compared to 34 percent in the fourth quarter of 2011.
In the fourth quarter there were 219,084
properties sold on a pre-foreclosure basis or from bank inventories, a decrease
of 10 percent from the third quarter and 1 percent from the fourth quarter of
2011.
"Although foreclosure-related
sales represent a shrinking share of total sales, primarily because of fewer
bank-owned purchases, distressed sales are still a disproportionately high
portion of the overall housing market," said Daren Blomquist, vice president of
RealtyTrac. "And while distressed properties - whether bank-owned,
pre-foreclosure or short sales not in foreclosure - are still selling at a
significant discount compared to non-distressed properties, average distressed
property prices are increasing in many markets thanks to strong demand and
limited inventory."
Homes sold pre-foreclosure in the
fourth quarter took an average of 336 days to sell after starting the
foreclosure process, down from an average of 359 days in the previous quarter
but still up from an average of 308 days in the fourth quarter of 2011. REO sales required an average of 178 days to
sell after foreclosure compared to 186 days in the third quarter and 175 days a
year earlier.
Some of the states with the biggest
increases in non-foreclosure short sales were Nevada (86 percent increase),
Wisconsin (45 percent increase), Washington (28 percent increase), and North
Carolina (24 percent increase).
Non-foreclosure short sales increased substantially in Michigan (33
percent), Florida (33 percent), and Nevada (33 percent).
Foreclosure related sales accounted
for nearly 38 percent of all sales in California, Georgia, and Nevada and for
34 percent in Arizona, and 31 percent in Michigan. They were more than one-fifth of the market
in Illinois, Florida, Colorado, Wisconsin, and New Hampshire.
In the foreclosure plagued
metropolitan area incorporating Riverside, San Bernardino, and Ontario,
California foreclosure-related sales accounted for 46 percent of all
residential sales in 2012