Despite Fewer Foreclosure Starts, Distressed Sales Rose in 2013
Despite Fewer Foreclosure Starts, Distressed Sales Rose in 2013
Despite declining foreclosure starts over the year, distressed sales made up a higher percentage of overall home sales in 2013 than they did the previous year, according to the U.S. Residential & Foreclosure Sales Report released Thursday by RealtyTrac. The report also revealed an uptick in cash purchases at the close of the year.
Foreclosure sales—which include sales to third-party buyers at foreclosure auction and sales of REOs—combined with short sales to make up 16.2 percent of residential property sales in 2013, an increase from 14.5 percent in 2012, according to RealtyTrac.
“It may surprise some to see distressed sales rising in 2013 given that new foreclosure activity dropped to a seven-year low for the year,” said Daren Blomquist, VP at RealtyTrac. However, Blomquist pointed out that “there are still more than 1.2 million properties in the foreclosure process or bank-owned, providing a sizable pool of inventory that the housing market is in the process of absorbing.”
About 29 percent of home sales in 2013 were all-cash deals, up from 19.4 percent in 2012. All-cash sales increased during the month of December and were significantly higher than a year ago. Cash deals made up 42.1 percent of December’s home sales, according to RealtyTrac, up from a share of 38.1 percent in November and just 18 percent in December 2012.
Cash purchases made up more than half of December home sales in five states, including Florida (62.5 percent), Wisconsin (59.8 percent), Alabama (55.7 percent), South Carolina (51.3 percent), and Georgia (51.3 percent).
Institutional investors were more active in the residential market in 2013 than in 2012, contributing to 7.3 percent of the year’s home sales, up from 5.8 percent the previous year. The share of institutional investor activity in December was slightly higher and was also up from the previous month. Institutional investors contributed to 7.9 percent of December’s home sales.
They were most active in December in Jacksonville, Florida (38.7 percent); Knoxville, Tennessee (31.9 percent); Atlanta, Georgia (25.2 percent); Cape Coral-Fort Myers, Florida (24.9 percent); and Cincinnati, Ohio (19.3 percent).
The percentage of home sales that were purchased by third parties at foreclosure auctions doubled over the year in 2013, rising from 0.5 percent in 2012 to 1 percent last year, RealtyTrac reported.
About 5.8 percent of home sales in 2013 were short sales, and 9.3 percent were REO sales, according to RealtyTrac. Short sales made up 5.7 percent of December’s home sales and were most common in Nevada (15.3 percent), Florida (14.4 percent), and Illinois (9.0 percent). REO sales contributed to 9.3 percent of sales in December and were most common in Nevada (18.9 percent), Michigan (18.4 percent), and Ohio (17.8 percent).
The national median home price in December was $168,391, according to RealtyTrac. Distressed homes sold for about 38 percent less than non-distressed homes. The median price of a distressed home was $108,494, compared to a non-distressed median price of $174,401.
Author Bio: Rob Alley earned a bachelors degree at Virginia Tech, in Blacksburg, VA in Biology. Rob Alley has been licensed for 6 years, he and his team of 4 agents consults with homeowners regarding Real Estate transactions and speciliazes in listing and selling Central Virginia Real Estate - Charlottesville, Louisa, Orange, Lynchburg, Nelson, Fluvanna, Amherst, Bedford, Campbell, Waynesboro and Augusta. Realtor/Owner of Virginia Real Estate Solutions at RE/MAX Realty Specialists
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