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.
Distressed property sales accounted for 9.4 percent of all homes nationwide in July, which represented a decline of more than 2 full percentage points from July 2014's share of 11.5 percent. July 2015's share was a decline of 0.4 percentage points from June's adjusted share of 9.8 percent, according to CoreLogic.
REO sales comprised 6.1 percent of all home sales in July, their lowest level since September 2007 when they made up 5.2 percent of all home sales. Short sales made up 3.4 percent of home sales in July and have remained in the 3 to 4 percent range since falling below 4 percent in mid-2014, CoreLogic reported.
Distressed sales made up 32.4 percent of all home sales nationwide at their peak in January 2009, with REO representing nearly 28 percent of that share. According to CoreLogic, the ongoing shift away from REO sales has been a driver of improving home prices, since REO properties typically sell at a larger discount than short sales.
By comparison, the pre-crisis share of distressed sales was typically around 2 percent; the distressed sales share would reach that level around mid-2019 if it continues to decline at the same year-over-year rate at which it declined in July 2015, according to CoreLogic.
The five states with the highest distressed sales shares in July 2015 were Florida (20.7 percent), Maryland (20.6 percent), Michigan (20.2), Connecticut (19.1 percent), and Illinois (18.9 percent). While some states reported high distressed sales shares in July, only North Dakota and the District of Columbia had distressed sales shares that were within one percentage points of their pre-crisis levels. The metro area with the highest distressed sales share in July was Orlando-Kissimmee-Sanford, Florida, with 23.8 percent.