RealtyTrac: Short sales at 3-year high

CoreLogic finds completed foreclosures down 15 percent in April from a year ago

A three-year high in pre-foreclosure sales, typically short sales, helped push the nation’s overall share of distressed sales up to 26 percent in the first quarter, according to a report from foreclosure data firm RealtyTrac released today.

A total of 233,299 properties sold in the first quarter were either in some stage of foreclosure, meaning they were subject to a default notice or scheduled auction, or had completed the foreclosure process and become bank-owned before being sold.

That total is virtually flat from first-quarter 2011, though it comprised a slightly higher share of overall sales — 26 percent — than in the same three-month period last year, when 25 percent of homes sold were distressed.

Twelve percent of overall sales and nearly 47 percent of foreclosure-related sales last quarter were pre-foreclosure homes — a total of 109,521 properties. That’s a 25 percent increase from first-quarter 2011 and the highest total since first-quarter 2009.

At the same time, sales of bank-owned homes, also known as REOs, fell 15 percent on an annual basis, to 123,778 — 14 percent of overall sales.

"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 RealtyTrac CEO Brandon Moore in a statement.

"Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short-sale transactions."

Homes in pre-foreclosure sold for an average $175,461 in the first quarter, down 10 percent on an annual basis and the lowest average since first-quarter 2005, when RealtyTrac first began keeping track. Pre-foreclosure properties sold for an average 21 percent less than a nondistressed home in the first quarter, up from a 16 percent discount at the same time last year.

The average sales price for a bank-owned home last quarter was $147,995, up 2 percent year over year and 33 percent below the average price of a traditional home. That discount has declined from first-quarter 2011, when it was 37 percent.

Foreclosure-related sales overall sold for an average of $161,214 in the first quarter, down 2 percent from a year ago and 27 percent under the average sales price of nondistressed homes during the quarter.

"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 said.

"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."

Oregon was among those states with a 41 percent increase in REO sales last quarter, followed by North Carolina (23 percent), Ohio (21 percent), Florida (13 percent) and Wisconsin (13 percent), the report said. REOs sold an average of 178 days after completing the foreclosure process, up from 176 days in the first three months of 2011.

Pre-foreclosure sales jumped on an annual basis in 27 states last quarter with Wisconsin seeing the biggest increase (94 percent) followed by Michigan (81 percent), Georgia (80 percent), Texas (46 percent), and Illinois (46 percent). Pre-foreclosure properties sold in an average of 306 days after entering the foreclosure process, up from 256 days in first-quarter 2011, the report said.

Nevada, California and Georgia posted the biggest shares of foreclosure-related sales in the first quarter. In Nevada, 56 percent of sales were distressed and sold for an average $116,695, down 5 percent from first-quarter 2011. In California, 47 percent of sales were foreclosure-related and sold for an average $235,042, down 4 percent year over year. In Georgia, 46 percent of sales were foreclosure-related and sold for an average $103,909, a 10 percent price decline from a year ago.

12 states with the highest share of foreclosure-related sales (Q1 2012):

State % foreclosure-related sales
Nevada 56%
California 47%
Georgia 46%
Arizona 40%
Michigan 39%
Illinois 31%
Colorado 30%
Wisconsin 28%
Oregon 27%
Minnesota 27%
Washington 26%
New Hampshire 26%

Source: RealtyTrac

Among the nation’s 20 most populous metropolitan areas, Atlanta saw the biggest jump in pre-foreclosure sales (78 percent), followed by Detroit (75 percent), San Antonio (74 percent), Sacramento, Calif. (70 percent), and Dallas (69 percent).

 

Minneapolis saw the largest increase in REO sales (33 percent), followed by Boston (30 percent), Philadelphia (22 percent), Atlanta (15 percent), and Chicago (13 percent).

 

Among metros with at 200,000 inhabitants, the 10 areas with the highest share of distressed sales were all either in California or Nevada.

Metro area % of all sales Avg sales price Avg discount (%)
Modesto, Calif. 65.3 $132,696 7.2
Stockton, Calif. 61.6 $154,868 7.3
Vallejo-Fairfield, Calif. 61.0 $181,197 10.8
Las Vegas-Paradise, Nev. 58.6 $115,459 15.2
Merced, Calif. 54.1 $109,044 12.2
Riverside-San Bernardino-Ontario, Calif. 52.9 $171,181 18.8
Visalia-Porterville, Calif. 52.2 $117,643 16.3
Sacramento-Arden-Arcade-Roseville, Calif. 52.2 $176,962 21.8
Salinas, Calif. 50.9 $270,444 27.7
Reno-Sparks, Nev. 49.5 $134,911 24.6

Source: RealtyTrac

In a separate report this week, real estate and loan data aggregator CoreLogic found that there were 15 percent fewer foreclosures completed nationwide in April compared to the same month last year — a total of 66,000.

Foreclosure inventory — homes currently undergoing the foreclosure process — stood at about 1.4 million homes in April, or 3.4 percent of all homes with a mortgage (about one-third of homes do not have mortgages). That’s a slight decline from 1.5 million, or 3.5 percent, a year ago.

"There were more than 830,000 completed foreclosures over the past year or, in other words, one completed foreclosure for every 622 mortgaged homes," said Mark Fleming, CoreLogic’s chief economist, in a statement.

"Nonjudicial foreclosure markets, like Nevada, Arizona and California, completed two and a half times as many foreclosures over the past year as judicial foreclosure states."

Source: CoreLogic 

Five states accounted for nearly half (49 percent) of completed foreclosures nationwide in April: California (142,000), Florida (92,000), Michigan (60,000), Texas (58,000), and Georgia (57,000). All but Florida are nonjudicial foreclosure states where foreclosures do not generally go through the courts.

"The inventory of homes in foreclosure in judicial foreclosure states is growing, but this increase is being more than offset by declining inventories in nonjudicial states where the processing timelines to clear a foreclosure are shorter," said Anand Nallathambi, CoreLogic’s CEO, in a statement.

Of the five states with the highest foreclosure inventory as a percentage of all mortgaged homes, only Nevada, with 5 percent of homes in the foreclosure process, was a nonjudicial foreclosure state. The remaining four were judicial foreclosure states: Florida with a foreclosure inventory of 12 percent, New Jersey (6.7 percent), Illinois (5.3 percent), and New York (5 percent).

Source: CoreLogic 

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