Sales of homes in some stage of foreclosure declined in the first three months of the year, but they still accounted for 28 percent of all home sales — a share nearly six times higher than what it would be in a healthy housing market.
Foreclosure sales, which include homes purchased after they received a notice of default or were repossessed by lenders, hit the highest share of overall sales in a year during the first quarter, foreclosure listing firm RealtyTrac Inc. said Thursday.
"It's an astronomically high number," said Rick Sharga, a senior vice president at RealtyTrac. "In a normal market, you're looking at the percentage of homes sold in foreclosure to be below 5 percent."
The pace at which homes are entering the foreclosure process has slowed in recent months amid bank and court delays. But distressed properties remain a fixture of a housing market still searching for a sustained recovery. The properties, often in need of repair, typically sell at a discount, weakening prices for other types of homes.
As a slice of all home purchases, foreclosure sales peaked two years ago at 37.4 percent. In the first quarter, they rose from 27 percent in prior quarter, but fell from 29 percent a year earlier, according to RealtyTrac.
Sales of foreclosure properties didn't fare much better than other types of homes, however.
In all, 158,434 homes in some stage of foreclosure were sold in the first quarter, down 16 percent from the last three months of 2010 and down 36 percent versus a year ago. Sales of all other types of homes also declined sharply, according to RealtyTrac's figures, which differ from other home-sales estimates.
While the number of bank-owned properties sold declined, they grew as a share of all home sales. Bank-owned homes accounted for nearly 19 percent of all sales, up from 17 percent in the fourth quarter and up from 18 percent a year ago, the firm said.
That's not good news for the housing market.
RealtyTrac estimates there are 872,000 homes that have been repossessed by lenders, but have yet to be sold. At the first-quarter's sales pace, it will take three years to clear the inventory of 1.9 million properties already in some stage of foreclosure.
For bank-owned properties alone, that amounts to a 2-year supply.
"Clearly, the housing market is not out of the woods," Sharga said.
Homebuyers who purchased a bank-owned home in the first quarter saved an average of 35 percent versus the average price of other types of homes, RealtyTrac said.
That discount is unchanged from the previous quarter, but up from an average of 33 percent a year ago.
Buyers who snapped up other homes in the foreclosure process, including short sales, got an average discount of 9 percent, the firm said. That's down from an average of 13 percent in the fourth quarter and an average of 14 percent a year ago. In a short sale, the seller and their lender agree to sell the home for less than what is owned on the mortgage.
The biggest foreclosure discounts were to be had in Ohio, where foreclosure properties sold for an average of 41 percent less than other types of homes, RealtyTrac said.
The average sales price of a foreclosure property was $168,321, down 1.9 percent from the fourth quarter and 1.5 percent from the first quarter last year, the firm said.
At a state level, Nevada led the nation with foreclosure sales accounting for 53 percent of all home sales, RealtyTrac said. That was down from 59 percent the year before.
The state has the highest foreclosure rate in the nation and an inventory of nearly 28,000 bank-owned properties on bank's books. Buyers scooping up foreclosure properties there in the first quarter got an average discount of nearly 18 percent compared to the average sales price of other types of homes, RealtyTrac said.
In California, foreclosure sales accounted for 45 percent of all home sales in the first quarter, down from nearly 48 percent a year earlier. The average foreclosure property sold for nearly 34 percent less than the average sales price of homes not in foreclosure.
In Arizona, foreclosure sales represented 45 percent of all home sales for the quarter, down from 47 percent a year earlier.
Several other states had foreclosure sales that accounted for at least one quarter of all home sales in the first quarter: Idaho, Florida, Michigan, Oregon, Virginia, Colorado, Illinois, Georgia and Ohio.
© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.