Distressed House Sales Increasing Again...

First American Corelogic released their first distressed sales report yesterday morning: Distressed Sales Again on the Rise, Reaching 29% in January

First American CoreLogic today released its first monthly report on distressed sales activity. The report below indicates that distressed home sales – such as short sales and real estate owned (REO) sales – accounted for 29 per cent of all sales in the U.S. in January: the highest level since April 2009. The peak occurred in January 2009 when distressed sales accounted for 32 per cent of all sales transactions (Figure 1). After the peak in early 2009, the distressed sale share fell to 23 per cent in July, before rising again in late 2009 and continuing into 2010.

Here are a couple of graphs from the report:

Distressed Sales

Click on graph for larger image in new window.

Credit: First American Corelogic.

This graph shows the total per cent of distressed sales broken down by REO and Short Sales. Notice that the per cent short sales has increased significantly over the last year – that trend will probably continue.

Distressed Sales

The second graph shows the breakdown by certain metropolitan areas.

Among the largest 25 markets, Riverside, CA, had the largest percentage of distressed sales in January (62 per cent), followed closely by Las Vegas (59 per cent) and Sacramento (58 per cent) (Figure 2). The top REO market was Detroit where the REO share was 48 per cent, followed closely by Riverside (47 per cent) and Las Vegas (45 per cent). San Diego’s short sale share was 19 per cent in January, making it the highest ranked short sale market, followed by Sacramento (18 per cent) and Oakland (16 per cent). Although the top 10 markets for foreclosures are all located in Florida, only two Florida markets, Orlando and Cape Coral, made the top 10 distressed sale list. The most likely reason: Florida is a judicial state where foreclosures process through the courts and take quite a bit longer than in California, Arizona or Nevada, where non‐judicial foreclosures are the norm.

I’ve been following the Sacramento market as an example of a distressed market – and the Sacramento Association of REALTORS® reported that almost 69% of sales were distressed in January, with 24% short sales, and 45% REOs. The FACL data shows about 58% as distressed. The difference is probably in the methodology.

The exact numbers probably aren’t as important as the trend – and this will be an interesting trend to follow in 2010.


This post is reprinted from Calculated Risk, a leading finance and economics site.

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