Distressed properties take up smaller portion of sales in Q3
For some time now, the percentage of the home sales market taken up by distressed properties such as foreclosures and short sales has been dwindling, thanks to the slowly improving housing market and declining foreclosure inventory nationwide. That trend certainly continued in the third quarter of this year.
In all, the total number of homes sold in the U.S., whether distressed or undistressed, slid somewhat, to an annual rate of slightly more than 4.4 million sales at the end of the third quarter, according to the latest Residential and Foreclosure Sales Report from the industry data firm RealtyTrac. That was down 1 percent from August's numbers, as well as 19 percent on an annual basis.
But a potentially large part of this decline came because sales of distressed properties took another major step back, the report said. In all, these properties made up 12.7 percent of sales in the third quarter, marking a huge decline from the 14.2 percent seen just three months earlier, as well as 14.5 percent down from the same quarter last year. They now stand at the lowest level observed since the company began tracking such data in the first quarter of 2011.
Bank-owned foreclosures take the biggest hit
Much of that decline was driven by the fact that foreclosed properties owned by lenders themselves are now taking up a smaller portion of the market, the report said. In the third quarter, they accounted for 7.8 percent of all sales, down from 8.8 percent in the second quarter and 9 percent in the third quarter of 2013.
"Even as the share of distressed sales decreases, the average discount on distressed properties continues to be substantial because the primary factors driving that discount are still in place," said Daren Blomquist, vice president of RealtyTrac. "Distressed properties are typically in poor condition and have a highly motivated seller – whether that seller is the distressed homeowner in foreclosure or the bank that has repossessed the property through foreclosure."
This kind of shift could be a major issue for many bargain hunters who are still in the market these days. Affordability has been falling for some time anyway, with median home values nationwide on the rise, and rates inching slowly upward. The latter might become an even greater point of concern going forward, as experts project they could hit 5 percent by the middle of next year.
By: Equity National October 30, 2014 Closing