Foreclosures comprised smaller slice of 2011 sales
Thursday, March 1, 2012
Bank-owned homes and short sales last year accounted for the smallest slice of overall sales in three years but still made up nearly a quarter of all U.S. homes sold in 2011.
Some 907,138 sales were made last year of foreclosed-upon homes and others that were in some stage of the process. They represented about 23 percent of all home sales in 2011, foreclosure listing firm RealtyTrac Inc. said Thursday.
As a percentage of all homes sold, sales of bank-owned properties and other homes on the foreclosure track last year were back down to 2008 levels. But they remained an outsize portion of total sales compared 2005, when sales of previously occupied homes peaked and foreclosure sales comprised less than 1 percent of all sales, the firm said.
The sales peaked in 2009 at about 1.1 million and made up about 37 percent of all sales.
The decline in foreclosure-related sales last year coincided with a sharp drop in the number of homes taken back by lenders as the banking industry wrestled with foreclosure-abuse claims.
Those claims, which included allegations that banks and mortgage servicers processed foreclosures without verifying documents, led banks to temporarily put foreclosures on hold, refile others and put off taking action against borrowers behind on their mortgage payments.
That helped slow the flow of foreclosed properties available for sale in Las Vegas, Detroit and other markets.
A $25 billion settlement reached earlier this year between the nation’s biggest mortgage lenders and 49 state attorneys general has begun paving the way for more foreclosures this year, however.
“That wave of new foreclosures that we’re seeing is going to translate into more short sale listings and more bank-owned listings in the next three to six months,” said Daren Blomquist, a vice president at RealtyTrac.
At the end of January, there were 645,000 bank-owned homes in the U.S. that had yet to be sold, representing a 17-month supply at the current sales pace, Blomquist said.
In addition, another 710,000 homes were in some stage of the foreclosure process.
Other estimates put the number of homeowners who are either behind on their mortgage payments or in foreclosure at the end of last year more than 6 million.
That represents a glut of potential homes that could still hit the market in coming months — good news for bargain hunters, as foreclosures typically sell at big discounts to other properties. Homes in the foreclosure process also sometimes sell for less than what the previous owners owed on their mortgage, a transaction known as a short sale.
More foreclosure sales also means potentially more pain for homeowners, who could see the value of their homes erode further as neighboring foreclosures sell.
Combined, bank-owned homes and those still in the foreclosure process sold for an average of $164,349 last year, 33 percent less than the average sale price of all other homes. In 2010, they sold at a 32 percent discount, RealtyTrac said.
Patrick Newport, an economist with IHS Global Insight, said he expects that foreclosures, in addition to weak demand for homes, high unemployment and other factors, will push U.S. home prices down as much as 10 percent this year.
Others say modest increases in sales over the past few months could stop prices from falling by late winter or early spring.
Sales of all previously occupied homes rose last year to 4.26 million from 4.19 million in 2010. Sales of new homes, which account for less than 10 percent of the housing market, totaled 304,000 last year — the fewest on records dating back to 1963.
Bank-owned homes, which are sold after being repossessed, made up nearly 14 percent of all home sales last year and averaged 40 percent less than properties not in foreclosure.
Homes in some stage of the foreclosure process — in default or scheduled for auction — comprised 9 percent of all sales in 2011. On average, they sold for 22 percent less than other types of homes.
All told, foreclosure-related sales nationwide declined 2.2 percent from a year earlier, RealtyTrac said.
Nevada led all states with foreclosure-related sales making up 54 percent of all home sales last year, up 17 percent from a year earlier. California had the highest number: 246,780, or 43 percent of total home sales in the state.
Foreclosure-related sales also comprised at least 20 percent of all home sales last year in Arizona, Colorado, Florida, Georgia, Idaho, Illinois, Michigan and Oregon.
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