Homes listed in some stage of foreclosure or bank owned accounted for 24% of all U.S. residential sales in the fourth quarter, up from 20% in the previous quarter but down 26% of all sales in the fourth quarter of 2010, according to the 2011 U.S. Foreclosure Sales Report released Thursday by RealtyTrac.
Third parties purchased a total of 204,080 residential properties in some stage of pre-foreclosure or bank-owned REO during the fourth quarter, down 8% from a revised third quarter total and down 2% from the fourth quarter of 2010. That brought total foreclosure-related sales in 2011 to 907,138, down 2% from 2010 and accounting for 23% of all sales during the year.
“Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures,” says Brandon Moore, CEO of RealtyTrac. “Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year. We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months.
The average sales price of homes in foreclosure or bank owned was $164,944 in the fourth quarter, nearly identical to the average foreclosure-related sales price in the previous quarter and down 5% from the fourth quarter of 2010. The average price of a foreclosure-related sale was 29% below the average price of a non-foreclosure sale during the quarter, down from a 34% foreclosure discount in the third quarter and down from a 35% foreclosure discount in the fourth quarter of 2010.
“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” Moore says. “Nationally, pre-foreclosure sales increased 15% from a year ago while REO sales decreased 12%. Pre-foreclosure sales outnumbered REO sales in several bellwether markets, including Los Angeles, Miami and Phoenix, where REO sales had outnumbered pre-foreclosure sales a year ago. That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans.”
Third parties purchased a total of 88,303 pre-foreclosure homes — in default or scheduled for auction — during the fourth quarter, a decrease of 5% from the previous quarter but up 15% from the fourth quarter of 2010. Pre-foreclosure sales accounted for 10% of all sales during the fourth quarter and 9% of all sales for all of 2011.
Pre-foreclosure sales increased more than 20% on a year-over-year basis in several states, including Michigan (103%), Georgia (59%), Arizona (48%), Washington (36%), Nevada (29%), Oregon (27%), Illinois (26%), Ohio (25%), California (23%) and Texas (22%).
Pre-foreclosures, which are often sold via short sale, sold for an average of $184,221 in the fourth quarter, down 3% from the previous quarter and down 11% from the fourth quarter of 2010. The average sales price of a pre-foreclosure home in the fourth quarter was 21% below the average sales price of a non-foreclosure home, similar to the discount of 22% on pre-foreclosure purchases for the entire year.
Third parties purchased a total of 115,777 bank-owned (REO) homes in the fourth quarter, down 10% from the previous quarter and down 12% from the fourth quarter of 2010. REO sales accounted for 13% of all sales during the fourth quarter and 14% of all sales for all of 2011.
Foreclosure sales accounted for 56% of all residential sales in Nevada in the fourth quarter, the highest percentage of any state. Third parties purchased a total of 52,086 homes in foreclosure or bank-owned in Nevada during all of 2011, representing 54% of all sales and up 17% from 2010.
Other states where foreclosure-related sales accounted for 20% or more of all sales in the fourth quarter were Arizona (38%), Michigan (33%), Colorado (26%), Illinois (26%), Minnesota (23%), Washington (21%), and Florida (20%).