Tough Time for Sellers

Foreclosures: One-third of Fla. sales

June 30, 2010
Author: 2010 Florida Realtors®

WASHINGTON – June 30, 2010 – According to a new report from RealtyTrac, foreclosure homes accounted for 31 percent of all residential sales in the first quarter of 2010. Additionally, the average sales price of properties sold while in some stage of foreclosure was nearly 27 percent below the average sales price of properties not in the foreclosure process.

A total of 232,959 U.S. properties in some stage of foreclosure – default, scheduled for auction or bank-owned (REO) – sold to third parties in first quarter 2010, a decrease of 14 percent from the previous quarter and down 33 percent from the peak during the first quarter of 2009, when sales of foreclosure homes accounted for 37 percent of all residential sales.

“First-time homebuyers and investors continue to buy foreclosure properties in large numbers and at substantial discounts,” says James J. Saccacio, chief executive officer of RealtyTrac. “As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”

The average sales prices on properties in some stage of foreclosure decreased 23 percent from 2006 to 2009, while the average discounts on foreclosure purchases steadily increased from 21 percent in 2006 to 27 percent in the first quarter of 2010. Discounts on REOs are larger than discounts on pre-foreclosures, although discounts on pre-foreclosures appear to be trending higher as short sales become more common.

Also from the RealtyTrac report:

• Foreclosure sales increased 2,500 percent from 2005 to 2009.

• More than 1.2 million U.S. properties in some stage of foreclosure sold to third parties in 2009, an increase of 25 percent from 2008 and an increase of nearly 327 percent from 2007.

• Total foreclosure sales in 2009 were up more than 1,100 percent from 2006.

• Foreclosure sales accounted for 29 percent of all sales in 2009, up from 23 percent in 2008 and up from 6 percent in 2007.

• The average sales price of properties that sold while in some stage of foreclosure in 2009 was 25 percent below the average sales price of properties not in the foreclosure process. That was up from an average discount of 22 percent in 2008 but down from an average discount of 26 percent in 2007.

• The average foreclosure discount in 2005 was 35 percent, driven by a nearly 50 percent discount on REOs; however, the discount on pre-foreclosures trended up slightly over the same five-year period, from nearly 12 percent in 2005 to 15 percent in 2008 and 2009.

• Nevada, California, Arizona posted the highest percentage of foreclosure sales in the first quarter. Foreclosure sales accounted for 64 percent of all sales in Nevada in the first quarter, the highest percentage of any state. California posted the second highest percentage, with foreclosure sales accounting for 51 percent of all sales there in the first quarter – up slightly from 50 percent in the previous quarter but down from 70 percent of all sales in the first quarter of 2009. Foreclosure sales as a percentage of all sales were also down in Arizona from the first quarter of 2009, but the state still posted the third highest percentage in the first quarter, with foreclosure sales accounting for 50 percent of all sales.

• Other states where foreclosure sales accounted for at least one-third of all sales were Massachusetts, Rhode Island, Florida, Michigan, Georgia, Illinois, Idaho and Oregon.