Distressed home sales (REO and short sales) as a percentage of all home sales continued their downward trend toward "normal" levels in June 2015, falling 2.4 percentage points year-over-year down to 9.4 percent, according to CoreLogic's distressed sales data for June 2015 released Thursday.
The overall distressed sales share of 9.4 percent in June 2015 was the lowest total for any June since 2007, when the distressed sales share was 4.9 percent.
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.
The peak for overall distressed sales share of 32.3 percent was also reached in January 2009. By comparison, the pre-crisis distressed sales share hovered around 2 percent; if the current declining trend in distressed sales share continues, it would be back to that level around mid-2018, according to CoreLogic.
Short sales accounted for about 5.4 percent of all home sales during that peak month of January 2009. In June 2015, short sales made up about 3.4 percent of all home sales. The share of short sales fell below 4 percent in mid-2014 and has remained stable since.
The five states with the largest distressed sales share in June 2015 were Florida (21 percent), Michigan (20.7 percent), Maryland (20.5 percent), Connecticut (19.3 percent), and Illinois (19.1 percent). The state with the largest year-over-year decline in distressed sales share was Nevada, with 6.8 percent. The state with the largest decline from its peak distressed sales share was California, where the share fell 58.3 percentage points from its January 2009 peak of 67.4 percent. According to CoreLogic, only North Dakota and the District of Columbia are within one percentage point of their pre-crisis levels.
The top three metro areas with the highest distressed sales in June share were all located in Florida: Orlando-Kissimmee-Stanford (24.2 percent), Miami-Miami Beach-Kendall (22.8 percent), and Tampa-St. Petersburg-Clearwater (22.5 percent). Chicago (22 percent) and Baltimore (20.6 percent) rounded out the top five.