Distressed Sales Share Cracks Into Single Digits

by devteam September 10th, 2015 | Share

While sales of lender owned real estatern(REO) and short sales continue to account for around one-fifth of all homernsales in at least five states the share of distressed home sales is steadilyrnreturning to normal levels on a national basis. rnCoreLogic said today that REO sales accounted for 6 percent of all residentialrnsales in June, the lowest share since September 2007 when it was 5.2rnpercent.  Short sales made up 3.4 percentrnof the total. </p

The combined distressed sales share,rn9.4 percent, is down 2.4 percentage points from June 2014 and 0.9 point fromrnMay, bringing the share into single digit territory.  CoreLogic says these sales typically dip inrnJune due to seasonal factors but this month’s share was the lowest for Junernsince it hit 4.9 percent in 2007. </p


Florida had the largest share ofrndistressed sales of any state at 21 percent in June 2015, followed by Michiganrn(20.7 percent), Maryland (20.5 percent), Connecticut (19.3 percent) andrnIllinois (19.1 percent). Nevada had a 6.8 percentage point drop in itsrndistressed sales share from a year earlier, the largest decline of any state.  California has improved the most from arnstate-level peak, falling 58.3 percentages points since the January 2009 distressedrnsales share of 67.4 percent. </p

Among the 25 largest Core BasedrnStatistical Areas based on loan count the highest share of distressed salesrnwere in Orlando at 24.2 percent, followed by Miami (22.8 percent), Tampa-St.rnPetersburg-Clearwater. (22.5 percent), Chicago (22 percent) and Baltimore (20.6rnpercent). </p

At the peak in January 2009, 32.3rnpercent of all home sales nationally were distressed properties.  REO sales alone accounted for 27.9rnpercent.  The declining share of thernlatter are a driver of improving home prices as lender-owned propertiesrntypically sell at a greater discount from market value than do shortrnsales.  </p

The pre-crisis share of distressedrnsales was traditionally about 2 percent.  CoreLogic says while There will always be somernlevel of distress in the housing market, if the current year-over-year decreasernin the distressed sales share continues, it would reach that “normal”rn2-percent mark in mid-2018.  Only NorthrnDakota and the District of Columbia are even close to their pre-crisis numbers.rn

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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