Sales of foreclosed properties fell by one third in the first quarter from a year ago and 14 percent from the last quarter of 2009, according to a new report released today by RealtyTrac, the leading online marketplace for foreclosure properties.
A total of 232,959 U.S. properties in some stage of foreclosure sold in the first quarter, a decrease of 14 percent from the previous quarter and down 33 percent from the peak during the first quarter of 2009, when sales of foreclosure homes accounted for 37 percent of all residential sales.
Though there were fewer foreclosures, their impact on prices in local markets may have been greater than previously thought. Foreclosures were discounted nearly 27 percent below the average sales prices of non-foreclosed homes. Yet nationally, prices were stable during the quarter. The National Association of Realtors reported the national median existing-home price for all housing types was $170,700 in March, up 0.4 percent from March 2009. Distressed homes were typically sold at a 15 percent discount.
The average sales prices on properties in some stage of foreclosure decreased 23 percent from 2006 to 2009 while the average discounts on foreclosure purchases steadily increased from 21 percent in 2006 to 27 percent in the first quarter of 2010. Discounts on REOs are larger than discounts on pre-foreclosures, although discounts on pre-foreclosures appear to be trending higher as short sales become more common, RealtyTrac said.
“First time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” said James J. Saccacio, chief executive officer of RealtyTrac. “As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”
The states with the three highest average foreclosure discounts were Ohio, Kentucky and Illinois. There the average sales price of properties that sold while in some stage of foreclosure in the first quarter was 39 percent below the average sales price of properties not in the foreclosure process.
The average overall foreclosure discount was at least 35 percent in California, Tennessee, Pennsylvania, DC and New Jersey.
The biggest discount on bank-owned properties was in New York, where the average sales price for REOs was 52 percent below the average sales price for properties not in foreclosure. The biggest discount on pre-foreclosure properties was in Rhode Island.