Distressed Home Sales Nearing Peak

April 8, 2010 No Comments »


Distressed home sales, including short sales and real estate owned (REO) foreclosure sales, accounted for 29 percent of all home sales in January, according to First American CoreLogic.

That’s the highest level since April 2009, and just below the peak 32 percent share seen in January 2009.

After peaking, distressed sales fell to 23 percent in July, before beginning to rise throughout the rest of 2009 and 2010.

During the past year, there have been 974,000 distressed home sales, including 740,000 REOs and 234,000 short sales.

Among the largest 25 markets, Riverside, California had the largest percentage of distressed sales at a staggering 62 percent, followed by Vegas at 59 percent and Sacramento at 58 percent.

The highest ranked short sale market was San Diego, where such transactions held a 19 percent share in January, followed by Sacramento (18 percent) and Oakland (16 percent).

Expect distressed sales to rise thanks in part to the streamlined short sale program introduced by the Treasury last month.

First American noted that distressed sales exhibit a strong negative influence on home prices, as evidenced by the trough in home prices at the exact same time distressed sales peaked.

The average non‐distressed market‐sale price was $247,700 in January, while the average distressed-home price was $161,600.

The average REO price was $141,900 during the month, compared to $215,300 for a short sale.

The discount between market sales and distressed sales is currently about 33 percent and has been in that range over the past year.

distressed sales

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