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Distressed Sales at 9-Year Low

2016 was a slow year for cash sales, according to a CoreLogic report. The full-year cash sales share for 2016 was 32.1 percent, 2.2 percentage points below the full-year 2016 share. This was the lowest full-year cash sales share since 2007. Cash sales reached a peak in 2011 at 46.6 percent. The cash sales share of total home sales averaged approximately 25 percent before the housing crisis, and are expected to hit this range again by mid-2019.

In December 2016, cash sales share was 33.1 percent, down 1.3 percentage points year-over-year. Real-estate owned (REO) sales the largest share of cash shares in December 2016, at 61.1 percent. Short sales had the next highest cash sales share at 34.2 percent, followed by resales at 33 percent, and newly constructed homes at 16.7 percent.

New York had the largest amount of cash sales of any state in December 2016, with a cash sales share of 47.9 percent. Next highest were New Jersey (47.6 percent), Alabama (46.1 percent), Michigan (44.3 percent), and Florida (42.1 percent).

The distressed sales share for December 2016 was 7.8 percent, the lowest distressed sales share for any month since October 2007. Additionally, the full year distressed sales share was the lowest since 2007, at 8.9 percent, 2 percentage points lower than 2015. Before the housing crisis, distressed sales averaged around 2 percent, and the share is expected to reach that point again by mid-2018.

Altisource Chief Revenue Officer John Vella explains what has caused distressed sales to drop. "The decline in distressed inventory is a culmination over the past few years of better loss mitigation efforts by the servicers and improved credit quality of newly originated loans," he said. "Although delinquency and roll rates indicate that the decline will continue, there will always be short sales and foreclosure sales—just not at the historic volumes that we witnessed five years ago. With fewer distressed sales and inventory, servicers will remain focused on early stage loss mitigation, improving the borrower experience and adhering to all the new and changing regulations."

All states but nine recorded lower distressed sales in December 2016 compared with a year earlier. Maryland had the largest share of distressed sales at 17.9 percent in that month followed by Connecticut at 17.6 percent, Michigan (15.8 percent), and Illinois (13.6 percent). The smallest amount of distressed sales could be found in North Dakota, at 1.3 percent. North Dakota, Utah, and District of Columbia are the only states within one percent of their pre-crisis levels.

About Author: Seth Welborn

Seth Welborn is a contributing writer for DS News. He is a Harding University graduate with a degree in English and a minor in writing, and has studied abroad in Athens, Greece. An East Texas native, he also works part-time as a photographer.
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