Distressed home sales accounted for 13.5 percent of all home sales nationwide in February 2015, which represented a decline of 3 percentage points from February 2014, according to CoreLogic's February 2015 Distressed Sales data released Tuesday.
February 2015's distressed sales share was the lowest reported for any February since 2008, right at the beginning of the financial crisis. REO sales had the largest share of sales within the distressed category with 9.7 percent, and short sales made up 3.8 percent.
At their peak in January 2009, distressed sales accounted for 32.4 percent of all home sales nationwide, with REO sales comprising 28 percent of distressed sales during that month.
"The ongoing shift away from REO sales is a driver of improving home prices, as bank-owned properties typically sell at a larger discount than short sales," CoreLogic said in the report. "There will always be some amount of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in distressed sales share is maintained, the distressed sales share would reach that 'normal' 2-percent mark in mid-2017."
The top five states with the largest distressed sales share in February 2015 were Michigan (22.6 percent), Florida (22.2 percent), Illinois (20.4 percent), Maryland (19.1 percent), and Connecticut (19 percent). The state with the largest year-over-year decline in distressed sales share in February was Nevada, with a drop of 8.4 percentage points. The state with the largest decline in distressed sales share since the peak more than six years ago was California, where the share has declined by 57.3 percentage points since hitting a peak of 67.5 percent in January 2009.
Despite the steady decline of distressed sales share, only two states, North Dakota and Hawaii, plus the District of Columbia, posted a share in February 2015 that was within one point of their pre-crisis distressed sales share level.
The three Core-Based Statistical Ares with the highest distressed sales share (out of the top 25 CBSAs based on loan count) were all located in Florida – Miami-Miami Beach-Kendall (24.4 percent), Orlando-Kissimmee-Sanford (24.4 percent), and Tampa-St. Petersburg-Clearwater (23.8 percent), followed by Chicago-Naperville-Arlington Heights (23.1 percent), and Las Vegas-Henderson-Paradise (19.1 percent). The CBSA with the largest year-over-year decline in February 2015 in distressed sales share was Atlanta-Sandy Springs-Roswell (9.2 percentage points, from 25.4 percent down to 16.2 percent). The CBSA with the largest decline in distressed sales share since experiencing its peak was Riverside-San Bernardino-Ontario, which posted a distressed sales share of 13.2 percent in February 2015 compared with 76.3 percent in February 2009.