Foreclosures accounted for 28% of all U.S. home sales in the first quarter of 2011, according to RealtyTrac, a firm that monitors the foreclosure market
That represents the highest percentage of foreclosure sales since the first quarter of 2010 when 29% of the market comprised distressed properties. However, RealtyTrac points out that the higher percentage is mostly a byproduct of the sluggish market.
“The numbers themselves are fairly consistent, which shows there is still interest in these types of properties, but overall the housing market hasn’t improved,” Rick Sharga, RealtyTrac’s senior vice president, told MainStreet.
Both year over year and quarter to quarter, the total number of foreclosure properties sold actually fell. Third parties purchased 158,434 distressed properties during the first quarter, a decrease of 16% from a revised fourth quarter total, and down 36% from the total in the first quarter of 2010.
These stats are troubling since foreclosures left to languish on the market can keep property values low, thereby lengthening the time it will take for the housing market to recover.
RealtyTrac found the average sales price of properties in some stage of foreclosure — default, scheduled for auction or bank-owned (REO) — had dropped by 1.89% from the fourth quarter of 2010 to $168,321. This average sales price was nearly 27% below the average price of properties not in foreclosure.
Another factor slowing the housing market’s recovery is most banks’ inability to swiftly move their repossessed properties from foreclosure to sale.
Sharga told MainStreet earlier this year that banks were also slowing down foreclosure filing procedures since banks typically repossess homes they know will sell rather quickly.
“We’re far from out of the woods in terms of the housing market starting to improve,” Sharga said, adding that it should take exactly three years to clear the current inventory of 1.9 million foreclosures on banks’ books.
State-by-state, foreclosure sales accounted for 53% of all residential sales in Nevada, which had the highest percentage of foreclosures in all states during the first quarter, followed by Arizona and California, a state where 45% of all residential sales were foreclosures. Other states where foreclosure sales accounted for at least one quarter of all sales were Idaho (33%), Florida (32%), Michigan (32 %), Oregon (32%), Virginia (30%), Colorado (30%), Illinois (29%), Georgia (27%) and Ohio (25%).