Foreclosures still high
Despite the robo-signing debacle slowing down foreclosures as the processing and servicing is rapidly changing, foreclosures remain high and homes in default or scheduled for auction rose 6.5 percent in the second quarter from the first, according to RealtyTrac. In July 2011, one in every 611 homes received a foreclosure filing and the average sales price on distressed homes was $164,217, down slightly from the first quarter but down five percent from a year ago. Distressed home sales are now roughly 32 percent below the average sales price of homes not in foreclosure.
“In the face of an overall market where we’re seeing home sales declining, the fact that we’re seeing an increased number of distressed properties being sold suggests the market is correcting the way it needs to,” said Rick Sharga, senior vice president at RealtyTrac.
As housing continues to struggle along with the overall American economy, inventory remains a massive struggle, and overall sales dropped 11.1 percent in the Q2 2011 from Q2 2010. Analysts note the homebuyer tax credit expiration was pending in the second quarter of last year which stimulated home purchases.
The good news
Sharga said that sales of homes in the pre-foreclosure stage rose 19 percent from the first quarter and is “the first good news we’ve seen in this part of the housing market in quite some time. It allows the borrower to exit without a foreclosure, it gets a homebuyer into a property at a discount that’s probably in better condition than a bank-owned property and it allows the bank to lose less money ultimately on the transaction.”
Pre-foreclosure home sales are down 12.4 percent from the previous year, likely due to the homebuyer tax credit expiration promoting home sales of all types. Sales of pre-foreclosure homes accounted for 12.1 percent of all residential sales in the second quarter.
Distressed home sales
Sales of bank-owned homes were stagnant in the second quarter compared to the first, but saw a dip of 10.2 percent from twelve months ago. Bank-owned homes accounted for 19.2 percent of all residential sales in the second quarter.
Overall, distressed sales accounted for one in three residential sales in the second quarter, down 4.2 percent from the first quarter, yet up 24.4 percent from Q2 2010.