Nearly a quarter of a million
homes that were in some stage of foreclosure were sold during the second
quarter of 2010, an increase of 5 percent since Quarter One. This, however, was 20 percent fewer sales
than were recorded in that category in the second quarter of 2009.
According to the 2nd Quarter RealtyTrac Sales Report issued this morning, sales of homes in the process of
pre-foreclosure or out of lenders real estate portfolios (REO) accounted for 24
percent of all sales in the country.
Home sales overall increased from
the previous quarter, but while actual numbers of properties involved in
foreclosure sales increased from 232,959 in the first quarter to 248,534, the market share of foreclosure sales was down from 31 percent. Extrapolating from RealtyTrac's foreclosure
sales numbers and percentages, an estimated 1.4 million homes were marketed in
Q2 compared to 752,000 in the previous period.
James J. Saccacio, chief
executive officers of the Irvine California based firm said, "While foreclosure
sales increased in the second quarter, non-foreclosure sales increased even
more, spurred on by the homebuyer tax credit that expired during the
quarter. That had the net effect of
lowering foreclosure sales as a percentage of total sales during the quarter,
but that may be a temporary dip as the removal of the tax credit could drive
more buyers back to discounted short sales and REOs."
Lenders appear to be moving substantial
numbers of properties before they fall into bank ownership. 151,290 homes were sold from REO inventory
while 97,244 of sales were of properties in default or scheduled for
auction. While the latter were not
necessarily "short sales," that is transactions where the lender
agrees to take less than the balance owned in order to release its lien, many
were. While REO sales were up 3 percent
from Q1, they were down 28 percent from one year earlier. Pre-foreclosure sales increased 8 percent
from the previous quarter but were down 3 percent from a year earlier. REO sales represented 15 percent of all
residential sales in the country compared to 19 percent in Q1 and 20 percent a
year earlier while pre-foreclosure sales accounted for 9 percent, 3 percentage
points lower than the previous quarter but at about the same level as a year
earlier.
A buyer of REO continues to get a
substantial discount from market prices. REO sold at an average discount of just over 34.5 percent, a number
which was virtually unchanged from both the previous quarter and the figure a
year earlier. A pre-foreclosure
property, on the other hand, sold much closer to market price. The average discount was 13 percent, down
from 16 percent in Quarter One and 19 percent in the second quarter of 2009. On average, a buyer of distressed properties
averages a 26 percent discount.
As usual, Nevada, Arizona, and
California posted the highest percentage of foreclosure sales. More than half of all sales, 56 percent, in
Nevada were of homes in foreclosure but the actual number of sales was down 30.1
percent from Q1. Buyers in Nevada
received an average discount of 16 percent.
In Arizona 47.4 percent of sales were foreclosure related and in
California 43.2 percent. Discounts in
the two states were 24.8 percent and 39.3 percent respectively. It is important to note that discounts in these
long-term distressed states probably also reflect substantially depressed
market prices.
Other states where
foreclosure sales accounted for at least one-quarter of all sales were Rhode
Island (37 percent), Massachusetts (35 percent), Florida (34 percent), Michigan
(33 percent), Georgia (27 percent), Idaho (27 percent), and Oregon (25
percent). However, in Rhode Island the
number of sales was down 54 percent from the previous quarter and in
Massachusetts the change was -54 percent.
In both states the number of sales were down over 60 percent from one
year earlier
The highest discounts were
recorded in Ohio (43 percent), Kentucky (40.8 percent) and California (39
percent). Other states with average
foreclosure discounts of more than 35 percent were Michigan, Tennessee,
Pennsylvania, Georgia, Illinois, and Iowa, along with the District of Columbia.