RealtyTrac: Despite Drop In Foreclosures, Distressed Sales Increased In 2013

Posted by Patrick Barnard on January 23, 2014 No Comments
Categories : Mortgage Servicing

Considering that the national foreclosure rate has dropped significantly in the past year, it would make sense that distressed sales also declined, right?

Not so, according to RealtyTrac's December and Year-End 2013 U.S. Residential & Foreclosure Sales Report, which shows that short sales and foreclosure-related sales – including sales to third-party buyers at public foreclosure auctions and sales of bank-owned (REO) properties – together accounted for 16.2% of all residential sales in 2013, up from 14.5% in 2012 and up from 15.2% in 2011.

REO sales accounted for 9.3% of all residential sales in December, up from 8.7% in November and up slightly from 9.2% in December 2012.

More than 436,000 REO properties sold in 2013, accounting for 9.3% of all residential sales, up from 9.1% in 2012 and up from 8.7% in 2011.

"It may surprise some to see distressed sales rising in 2013, given that foreclosure starts dropped to a seven-year low for the year," says Daren Blomquist, vice president at RealtyTrac, in the report. "And while short sales did trend lower in the second half of the year, there are still more than 1.2 million properties in the foreclosure process or bank-owned, providing a sizable pool of inventory that the housing market is in the process of absorbing. Meanwhile, non-distressed sellers have not listed their homes for sale in droves, helping to keep the distressed share of sales at a stubbornly high level."

Short sales (where the sale price is below the total amount of outstanding loans secured by the property) accounted for 5.7% of all sales in December, up from 5.1% in November but down from 6.7% in December 2012.

The report shows that sales of single family homes, condominiums and townhouses for 2013 totaled 5,167,255, as of December – a 10% increase from December 2012. Home sales for December were up only 1% compared to November, according to the report.

Interestingly, year-over-year home sales declined in 18 of the nation's 50 largest metropolitan statistical areas (MSAs). What's more, home sales were down in five states – California, Arizona, Nevada, Rhode Island and Oregon – for the year.

The national median sales price of U.S. residential properties – including both distressed and non-distressed sales – was $168,391 in December, virtually unchanged from November and up 2% from December 2012.

The median price of a distressed residential property, whether in foreclosure or bank-owned, was $108,494 in December, 38% below the median price of $174,401 for a non-distressed residential property.

Helping to drive distressed sales in 2013 were all-cash sales, which accounted for 42.1% of all sales in December, up from a revised 38.1% in November, and up from 18% in December 2012.

For 2013, all-cash sales represented 29.1% of all residential sales – up from 19.4% in 2012 and 20.6% in 2011. However, RealtyTrac notes that the percentage trended substantially higher in the second half of the year.

States where all-cash sales accounted for more than 50% of all residential sales in December included Florida (62.5%), Wisconsin (59.8%), Alabama (55.7%), South Carolina (51.3%) and Georgia (51.3%).

Institutional investor purchases (comprising entities that purchased at least 10 properties in a year) accounted for 7.9% of all U.S. residential sales in December, up from 7.2% the previous month and up from 7.8% in December 2012.

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