Maryland, Florida top states for August distressed home sales
U.S. sales of distressed homes totaled 9.3% of all homes sold in August of this year, according to CoreLogic data. That is a 2.3 percentage point drop compared with August of 2014 and down 0.4 percentage points compared with July of this year.
A distressed sale is a transaction involving a real estateowned (REO) property or a short sale. In August, REO sales accounted for 6% of all home sales, and short sales accounted for 3.3% of all sales in the month. At the peak of distressed sales in January 2009, 32.4% of all sales were distressed, including REO sales, totaling 27.9% of all sales.
The CoreLogic report noted that “while distressed sales play an important role in clearing the housing market of foreclosed properties, they sell at a discount to non-distressed sales, and when the share of distressed sales is high, they can pull down the prices of non-distressed sales. There will always be some level of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2%. If the current year-on-year decrease in the distressed sales share continues, it would reach that ‘normal’ 2% mark in mid-2018.”
The five states with the largest percentage of distressed sales were Maryland (20.8%), Florida (20.3%), Michigan (19.9%), Connecticut (19.1%) and Illinois (18.7%). North Dakota posted the smallest share of distressed home sales at just 2.7%. Nevada had a six-point drop in its distressed sales share from a year earlier, the largest decline of any state, and California had the largest improvement of any state from its peak distressed sales share, falling 58.7 percentage points from its January 2009 peak of 67.4%.
Among the 25 largest metropolitan areas, these five posted the largest percentage of distressed sales: Orlando-Kissimmee-Sanford, Fla. (23.4%); Tampa-St. Petersburg-Clearwater, Fla. (21.9%); Miami-Miami Beach-Kendall, Fla. (21.9%); Baltimore-Columbia-Towson, Md. (21.2%); Chicago-Naperville-Arlington Heights, Ill. (21.1%). Las Vegas-Henderson-Paradise, Nevada, had the largest year-on-year drop in its distressed share, falling by 5.9 points from 21.8% in August 2014 to 15.9% in August 2015. Riverside-San Bernardino-Ontario, California, had the largest overall improvement in its distressed sales share from its peak value, dropping from 76.3% in February 2009 to 11.4% in August 2015.