First Quarter Shows Big Foreclosed Property Boom

By: Timothy McFarlin | Published: July 8th, 2010 | Category: Foreclosure Issues

According to RealtyTrac, a real estate data company based in California, close to one out of every three home sales, within the first quarter, was a property in foreclosure. There’s no question, the market has pushed the need for more distressed real estate RealtyTrac said in their latest report.

Recent data indicates, the total number of all foreclosure sales in 2009 was approximately 1,100% more than in 2006 and over 2,500% than in 2005. RealtyTrac also said recently, foreclosure sales alone accounted for 29% of all sales in 2009, a 23% jump from 2008’s numbers.

232,959 properties in foreclosure were purchased by and sold to third parties within the first quarter this year. This is a 14% decrease from the previous quarter and a 33% drop from 2009’s first quarter when foreclosure home sales encompassed nearly 37% of all residential sales. “The drop from the previous quarter can probably be attributed to seasonality, and while the year-over-year drop is significant, it should be noted that it was down from the peak,” said RealtyTrac’s Senior Vice President, Rick Sharga.

Foreclosure sales accounted for 64% of all home sales in Nevada, which was the highest state percentage. California, not surprisingly, came in with the second highest state percentage with foreclosure sales making up 51% of all its home sales within the first quarter. This figure is a 50% jump from the previous quarter.

“First time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” said James Saccacio, RealtyTrac’s Chief Executive Officer. “As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.” Indeed.

Overall, according to reports and stats, US homes in foreclosure made up for nearly 31% of all residential sales in the first quarter of this year; as well, the average sales price of foreclosure properties sold for roughly 27% below homes not in foreclosure.
“In a normal market, only one to two percent of home sales are foreclosures, so this is certainly a significant level,” said Sharga.

“A combination of an enormous inventory of distressed properties and an unprecedented interest by homebuyers to buy these properties boosted sales,” Sharga said as the average sales prices on properties in some stage of foreclosure decreased 23% over the course of three years—from 2006 to 2009, while the number of average discounts on these foreclosure sales jumped from 21% (2006) to 27% within the first quarter of 2010.

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