Tag Archives: Distressed Sales

Existing-home sales were way down in February, but the data from the National Association of Realtors shows that investor activity in the market is on the rise.

Distressed sales have been steadily falling since hitting their peak in 2009. Now that the backlog of foreclosures and REO properties has been clearing for years, how is this affecting business?

The combined share of REO property sales and short sales is less than a third of what it was at its peak nearly seven years ago.

When distressed properties account for a large share of all residential home sales, it tends to pull down the prices of non-distressed homes, since foreclosed and REO properties typically sell at a discount to non-distressed homes. Data released by CoreLogic shows that as of late, however, the still-high distressed sales share is not causing non-distressed prices to fall.

The share of all-cash sales continues to decline, and the share of homes purchased by institutional investors—who account for the largest percentage of all-cash sales—has dropped right along with it.

The distressed sales share, which includes sales of REO properties and short sales, was reported to be 9.3 percent for August 2015, down 2.3 percentage points from August 2014. August’s distressed sales share of 9.3 percent is the lowest since September 2007 and is less than a third off from its peak in January 2009, when it made up nearly a third of total residential home sales (32.4 percent).

Sales of distressed residential properties (REOs and short sales) continued heading toward their "normal" levels with another substantial year-over-year decline in July 2015, according to distressed sales data released by CoreLogic on Thursday.

REO sales accounted for 6 percent of total home sales in June, which was the lowest level since September 2007 when they made up 5.2 percent of all home sales in the country. REO sales hit their peak in January 2009, when they accounted for 27.9 percent of all home sales. According to CoreLogic, the continued shift away from REO sales is driving home price appreciation, since REO properties typically sell at a larger discount than short sales do.

Of that 9.9 percent distressed sales share reported for May 2015, REO sales accounted for 6.4 percent of all home sales, the lowest share for REO since October 2007, when it was reported at 6 percent.

When figuring in distressed sales (short sales and REO transactions), home prices jumped by 5.6 percent year-over-year in February, according to CoreLogic's February 2015 Home Price Index released on Tuesday.