Foreclosure Sales Still Abundant in the Real Estate Market . . .
Bank owned properties accounted for 28% of all home sales within the first quarter of 2011 even though the sale of foreclosed homes declined. This rate is nearly six times higher than a normal housing market should be.
Realty Trac Inc stated on May 26th that foreclosure sales hit the highest level of overall sales within a year during the first quarter nationally and also stated that the percentage of homes sold in foreclosure should be below 5%–in a normal market.
The sale of foreclosed homes in California accounted for 45% of all of the home sales within the first 3 months of 2011—down from 48% in 2010. Foreclosed properties sold for roughly 34% less than the average sale price of non-distressed property. Foreclosure sales in Arizona accounted for 45% of the overall sales in the first quarter—down 2 percentage points from 2010.
Numerous other states had sales of foreclosed property which accounted for ¼ of the sales of homes in the first quarter of 2011: Florida, Michigan, Oregon, Virginia, Colorado, Illinois, Georgia, Ohio and Idaho.
Court delays have caused the pace of the foreclosure process to slow in the past months. However, distressed homes and property remain within the housing market. The homes, as mentioned previously, are often in need of repair and sell at a substantial discount. This, of course, weakens prices for alternate homes for sale.
In the first quarter nationally, 158,434 distressed homes were sold. This is down 16% from the last 3 months of 2010 and down 36 percent from a year ago. Even though the sale of bank-owned properties declined, this still accounted for almost 19% of all sales—up from 17% in the fourth quarter of 2010.
There are still 872,000 homes that are being held by lenders yet still need to be sold. At the current pace it will take 3 years to clear the inventory of 1.0 million homes for sale already in a certain stage of foreclosure. This amounts to a 2 year supply for bank owned property alone.
Home Buyers saved an average of 35% when purchasing bank owned homes. This discount is unchanged from the previous quarter.
The largest discounts on foreclosure property can be found in Ohio where these homes sold for an average of 41% less than non-distressed homes for sale.
Nevada, who led the United States in foreclosure sales, showed that 53% of homes that were sold were distressed (bank owned or short sale). Nevada has an inventory of 28,000 bank owned properties currently on the market or scheduled to hit the market.