Foreclosure Sales Fall in Fourth Quarter 2010. Asterisks Noted

by devteam February 25th, 2011 | Share

Despiterna sizeable drop in the fourth quarter, sales of foreclosed properties againrnaccounted for over a quarter of all single-family home sales in 2010.  Sales of foreclosed homes represented almost 26rnpercent of all sales during the year, down from 29 percent in 2009.  The discount buyers received for these homes wasrn28 percent off the average sale price of a non-foreclosed property compared torna 27 percent discount in 2009.</p

ThernRealtyTrac Year and Q4 2010 U.S. Foreclosure Sales ReportTM released on Thursdayrnstates that a total of 831,574 residential properties that had either beenrnforeclosed or were in some stage of foreclosure were sold to third partiesrnduring the year.  This was a 31 percentrndrop in these sales from the 2009 level, but was a larger market share as the volumernof non-foreclosed property sales dropped 19 percent from 2009 figures.  </p

During the fourth quarter, sales of foreclosed homes dropped 22 percentrnand were down 45 percent from a year earlier however they reflected the lowerrnsales figures for all homes during the period and still accounted for 26rnpercent of total sales. The average discount was 28 percent, identical to the year-longrnaverage.</p

Here is where the asterisks come into play…</p

“Foreclosure sales in the fourth quarter faced the twin headwindsrnof the expired homebuyer tax credit – which began to stifle sales volumernduring the third quarter – and the foreclosure documentation controversy,rnwhich hit in the fourth quarter and temporarily froze sales of foreclosuresrnfrom several major lenders,” said James J. Saccacio, chief executivernofficer of RealtyTrac. </p

“Given those factors, it’s not surprising that inrnthe fourth quarter foreclosure sales volume hit its lowest level sincernthe first quarter of 2008.  Still,rnforeclosures continue to represent a  substantial percentage of all U.S.rnresidential sales and continue to sell at an  average sales price that isrnsignificantly below the average sales price of  properties not inrnforeclosure – the result of a bloated supply of foreclosures  and weakrndemand from homebuyers.”   Saccaciorncontinued, “The catch-22 for 2011 is that while accelerating foreclosure salesrnwill help clear the oversupply of distressed properties and return balancernto the market in the long run, in the short term a high percentage of foreclosurernsales will continue to weigh down home prices.” </p

RealtyTrac also breaks out sales by their foreclosure status.  Homes that were foreclosed and in bank ownedrn(REO) inventory represented 16 percent of all sales.  A total of 512,886 properties were sold outrnof inventory in 2010 at an average discount of 36 percent.  Inventory sales in 2009 represented a 32rnpercent market share and sold at an average discount of 33 percent.</p

The other category is homes in default or scheduled for auction. These arernusually described as short sales – transactions in which the bank receives lessrnthan the principal balance of the mortgage – although not all meet thatrndefinition.  In 2010 318,688rnpre-foreclosure properties sold, a decrease of 30 percent from the previousrnyear.  In 2010 the average discount wasrn15 percent; in 2009 it was 17 percent. Pre-foreclosure sales were 10 percent ofrnall sales in 2010 and 11 percent in 2009. rn</p

 In the fourth quarter, a totalrnof 95,683 REO properties (17 percent market share) and 53,620 pre-foreclosurernproperties (10 percent market share) sold to third parties. REO market sharernwas down 17 percent from the third quarter and 43 percent from the fourthrnquarter of 2009.  Pre-foreclosure marketrnshare was down 29 percent from the 3rd quarter and 49 percent yearrnover year.  The REO discount was 37rnpercent and the pre-foreclosure discount was a little under 13 percent.</p

As is always the case, Nevada, Arizona, and California led the nationrnin foreclosure sales during the year.  InrnNevada 57 percent of all sales were homes in some state of foreclosure, arndecrease from 67 percent in 2009.  Marketrnshare in Arizona dropped from 54 percent in 2009 to 49 percent in 2010, and inrnCalifornia sales were down from a peak of 57 percent in 2009 to 44 percent lastrnyear.</p

Other states where foreclosure sales accounted for at least one-quarterrnof all sales in 2010 were Florida (36 percent), Michigan (33 percent), Georgiarn(29 percent), Idaho (28 percent), Oregon (28 percent), Illinois (26rnpercent), Virginia (25 percent), and Colorado (25 percent). </p

There were 10 states where the discounts on REO properties were greaterrnthan 35 percent in 2010; leading were Ohio (43 percent) and Kentucky (40rnpercent).  Other states on the list werernTennessee, California, Pennsylvania, Illinois, New Jersey, Michigan, Georgia,rnand Wisconsin. </p

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


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

See all blogs


Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...