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IRVINE, CA-The number of US properties in some stage of foreclosure or REO that were sold during the first quarter decreased 18% from the previous quarter, down 22% from first-quarter 2012, according to locally based online real estate and foreclosure marketplace RealtyTrac. In addition, non-foreclosure short sales decreased 4% during the quarter, the firm reports.
Foreclosure-related sales accounted for 21% of all US residential sales during the first quarter, down from 25% of all sales in first-quarter 2012 and down significantly from a peak of 45% of all sales in first-quarter 2009. Properties not in foreclosure that sold as short sales in the first quarter accounted for an estimated 15% of all residential sales, bringing the total share of distressed sales during the quarter to 36%, according to RealtyTrac. Non-foreclosure short sales also trended lower in the first quarter, down 10% from the previous quarter and down 35% from first-quarter 2012.
“We expected foreclosure-related sales to be lower given the downward trend in new foreclosure activity nationwide over the past two-and-a-half years, but the decrease in non-foreclosure short sales was a bit of a surprise given the 11 million homeowners nationwide still underwater,” said Daren Blomquist, VP for RealtyTrac, in a prepared statement. “Rising home prices in many markets are stunting the continued growth of short sales by reducing incentive for both underwater homeowners and lenders.”
Blomquist added that underwater homeowners may be willing to stick it out a few more months—or even years—in the hope that they will be able to walk away with money at the closing table and without a hit to their credit rating, and for lenders a failed short sale may no longer translate into bigger losses down the road given that average prices of bank-owned homes are rising at a faster pace than non-distress home prices in many markets.
As GlobeSt.com reported last week, Blomquist told us, “A slow economy and tight financing mean that most consumers are willing to put aside their preferences to get a much lower price on an existing home—particularly distressed homes in foreclosure that we show on average sell for 30% below the average price of a non-distressed home.”
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
