Distressed property sales increased last month as first-time homebuyer activity slipped, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.
In January, a staggering 49.6 percent of home purchase transactions were considered “distressed,” the highest level in nearly a year.
The share of distressed properties, which includes bank-owned properties (REO) and short sales, was up from 47.2 percent in December, and well above the 44.5 percent share seen back in November.
Hard-hit California had an even larger share of distressed purchases, at 66 percent, followed by Florida with 63 percent.
And the distressed property share of home sales was an astounding 72 percent in the combined markets of Arizona and Nevada.
FHA lending grabbed just a 27.7 percent share of purchase money mortgages, down from 30.2 percent in December.
All of this has led to a decline in home prices, especially in the damaged REO and move-in ready REO categories.
The time on the market has also increased significantly as the average number of offers has dropped, meaning we could be in a for a long winter.