If sales of real estate owned (REO) properties are any indication, it appears that the number of completed foreclosures is “stuck” at about double the rate seen pre-crisis.
Black Knight Financial Services’ most recent Mortgage Monitor report shows that distressed sale activity (REO and short sales) accounted for about 7% of all residential transactions in the second quarter – and although this is the lowest such share in nine years, it is more than twice the “normal” market level of just over 3% seen pre-2007.
The majority of distressed sales taking place in the market today – roughly two-thirds – are REO sales, according to the report.
Interestingly, the discount purchasers got on short sales decreased to a national average of 21%, while the discount purchasers got on REOs increased slightly to 27%.
The trend toward deepening REO discounts is likely due to the geographic shift in transactions from areas where discounts are lower – such as Florida, with an average REO discount of 23% – to areas where they are steeper.
The largest REO discounts over the first six months of 2016 were in the Northeast and Rust Belt states.
Ohio led the nation with a 44% average discount on an REO over a traditional sale, followed by New Hampshire and New York with 41% discounts.
The smallest REO discounts were found in the Southwest, with Texas (14%) and Nevada (16%) seeing the lowest of all.
To check out the full Mortgage Monitor report, click here.