Distressed Sales to Remain Elevated until 2017

by devteam July 10th, 2015 | Share

While the share of home sales accountedrnfor by distressed properties continues to drift lower, only two states arernapproaching what could be considered normal levels.  CoreLogic said on Thursday that sales ofrnlender-owned real estate (REO) and short sales made up 11.1 percent ofrnresidential real estate transactions in April, down 3 percentage points fromrnApril 2014 and 1.5 points from March 2015. rnThe company noted that April is typically a month in which therndistressed sales share decreases from the previous month, but this was thernlowest share for any April since 2007.  </p


REO sales made up 7.4 percent ofrnsales and short sales 3.7 percent.  Shortrnsales have had a relatively stable market share since dropping below 4 percentrnin mid-2014.  There are always somerndistressed sales but they have typically accounted for only about 2 percent ofrnthe market so are still running at elevated levels even though far below thern32.4 percent, (27.9 percent REO sales) they represented at the peak of thernhousing crisis in January 2009.  </p

Only North Dakota and thernDistrict of Columbia are approaching normal levels of distressed sales.  At the current rate of decline CoreLogic itrnwill be mid-2017 before the national as a whole returns to a 2 percent share. </p

Several states are still seeingrnvery high distressed sales numbers.  Michigan is highest at 21.7 percent, only arnfraction ahead of Florida, also at 21.7 percent.  Maryland, Illinois, and Connecticut all hadrnApril distressed sales representing slightly more than 19 percent of the total.  The greatest improvement has been inrnCalifornia which has dropped by 57.8 percentage points from its January 2009rnpeak of 67.5 percent. </p

The Orlando area led the 25rnlargest Core Based Statistical Areas (by number of outstanding loans) with arn24.7 percent share of distressed sales. rnIt was followed by two other Florida areas, Miami at 23.8 percent andrnTampa-St. Petersburg-Clearwater at 19.8 percent.  The Riverside-San Bernardino area has droppedrnfrom a 76.3 percent distressed sales share in February 2009 to 12.7 percent inrnApril, demonstrating the most improvement in the country.

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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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