Foreclosures Make Up 24% of Home Sales

by Jeanine Skowronski 09/30/10

Foreclosed homes accounted for 24% of all residential sales in the second quarter of the year, according to the latest data from RealtyTrac, a firm that monitors the foreclosure market.

A total of 248,534 U.S. properties in some stage of foreclosure -- default, scheduled for auction or bank repossession -- sold to third parties in the second quarter. While this represents an increase of nearly 5% from the previous quarter, the figures are down 20% from the same time last year.

"While foreclosure sales increased in the second quarter, nonforeclosure sales increased even more, spurred on by the homebuyer tax credit that expired during the quarter," said James J. Saccacio, CEO of RealtyTrac.

Saccacio did warn, however, that this may be only a temporary rise as the expiration of the homebuyer tax credit could drive more buyers back to discounted short sales and bank repossessions.

According to the latest data, the average sales price of properties that sold while in some stage of the foreclosure process was more than 26% below the average sales price of properties not in foreclosure. This represents a 27% decrease from the average discount in the first quarter.

A separate study conducted by industry group S&P/Case-Shiller indicated that home prices have been on the rise for the past five consecutive months for which data are available. Prices rose only slightly in July, up 0.6% compared with June, according to the group's 20-city home price index. Housing prices rose 3.2% from the previous year.

RealtyTrac compiles its data from its online database of foreclosure properties, which includes more than 1.5 million default, auction and bank-owned listings from more than 2,200 counties.

State by state, it was a much bleaker picture. Foreclosure sales accounted for nearly 56% of all sales in Nevada in the second quarter, the highest percentage of any state. In Arizona, foreclosures accounted for 47% of all sales in second quarter. Other states where foreclosure sales accounted for at least one-quarter of all sales were Rhode Island, Massachusetts, Florida, Michigan, Georgia, Idaho and Oregon.

With so many properties entering foreclosure these days, it's little surprise they continue to represent such a large chunk of the total housing market. Data released by RealtyTrac earlier this month showed foreclosure activity increased 4% from July to August. More than 330,000 U.S. properties got default notices, scheduled auctions or were repossessed by the bank during that period, meaning that one in every 381 U.S. homes got a foreclosure filing in August.