The average foreclosure-related sales price in the second quarter ($170,040) soared 6 percent from the first quarter of the year and was up 7 percent from the second quarter of 2011 - the first annual increase in average price since Q2 2010 and the biggest annual increase since Q4 2006.
At the same time, discounts for homes in foreclosure or bank-owned sold at an average price that was 32 percent lower than the average price of a non-foreclosure home, up from a 30 percent discount in the first quarter and also a 30 percent discount in the second quarter of 2011, according to the latest data from RealtyTrac.
The data on discount increases contradicts recent reports based on surveys of real estate agents that foreclosure discounts, such as NAR’s Realtor Confidence Index survey, have declined to as little as 17 percent in July.
Dramatic declines in foreclosures are driving the price increases. REO sales decreased 31 percent from year ago.
“The second quarter sales numbers provide solid statistical evidence of what we’ve been hearing anecdotally from real estate agents, buyers and investors over the past few months: there is a limited supply of available foreclosure inventory to choose from in many markets,” said Daren Blomquist, RealtyTrac Vice President. “Given this shortage of supply and the seasonally strong buyer demand in the second quarter, it’s no surprise that the average foreclosure-related sales price increased both on a quarterly and annual basis.
“Three straight months of increasing foreclosure starts through July may ease the inventory shortage somewhat in the coming months when many of these foreclosure starts translate into listed short sales or bank-owned homes,” Blomquist added. “The increase in short sales of properties that have not even started the foreclosure process indicates that lenders are moving further upstream to deal with their distressed inventory, thereby avoiding the increasingly complex and lengthy foreclosure process altogether.”
Third parties purchased a total of 117,131 bank-owned (REO) homes in the second quarter, down 13 percent from the previous quarter and down 31 percent from the second quarter of 2011. REO sales accounted for 12 percent of all sales in the second quarter, the same percentage as in the first quarter but up from 11 percent of all sales in the second quarter of 2011.
REOs sold for an average price of $155,892 in the second quarter, up 6 percent from the first quarter and up 10 percent from the second quarter of 2011. The average sales price of a bank-owned home in the second quarter was 37 percent below the average sales price of a non-foreclosure home, the same percentage discount as in the first quarter but down slightly from a 38 percent discount in the second quarter of 2011.
REOs that sold in the second quarter took an average of 195 days to sell after completing the foreclosure process, up from 178 days in the first quarter and also 178 days in the second quarter of 2011.
Foreclosure sales accounted for 43 percent of all residential sales in both Georgia and Nevada in the second quarter, the two highest percentages among the states despite decreasing foreclosure-related sales activity in both states.
California foreclosure-related sales in the second quarter decreased 10 percent from a year ago, but still accounted for 40 percent of all residential sales in the state - the third highest percentage of any state. The average price of a foreclosure-related sale in California during the second quarter was $248,676, an increase of 4 percent from the previous quarter and also an increase of 4 percent from the second quarter of 2011.
Other states where foreclosure-related sales accounted for at least one in five sales in the second quarter were Michigan (35 percent), Arizona (33 percent), Illinois (27 percent), New Hampshire (24 percent), Colorado (22 percent), Wisconsin (22 percent), Minnesota (22 percent), Oregon (21 percent), and Florida (21 percent).
Foreclosure-related sales accounted for 57 percent of all residential sales in Modesto, Calif., the highest percentage of any of the nation’s 100 largest metropolitan statistical areas in terms of population.
Six other California metro areas were in the top 10 in terms of percentage of foreclosure-related sales: Stockton (54 percent); Riverside-San Bernardino-Ontario (47 percent), Bakersfield (46 percent), Sacramento (45 percent), Fresno (44 percent), and Oxnard-Thousand Oaks-Ventura (39 percent).
Metro areas outside of California with percentage of foreclosure-related sales ranking among the top 10 were Las Vegas (45 percent), Atlanta (45 percent), and Detroit (39 percent).