Sales of homes in some stage of foreclosure or bank-owned (REO) accounted for 23% of all U.S. residential sales in the second quarter - up from 22% of all sales in the first quarter and 19% in the second quarter of 2011, according to RealtyTrac, an online marketplace for foreclosure properties, in its Q2 2012 U.S. Foreclosure Sales Report.
Foreclosure-related sales as a percentage of total sales increased, but the raw number of foreclosure-related sales in the second quarter (224,429) decreased 12% from the previous quarter and was down 22% from the second quarter last year - the first annual decrease in foreclosure-related sales after five quarters of increases.
The average foreclosure-related sales price in the second quarter ($170,040) increased 6% from the previous quarter and 7% from the second quarter last year, the first annual increase in average price since the second quarter of 2010 and the biggest annual increase since the fourth quarter of 2006.
Dramatic declines in foreclosures are driving the price increases. REO sales decreased 31% from year ago. The number on discount increases contradicts recent reports based on surveys of real estate agents that foreclosure discounts, such as NAR’s Realtor Confidence Index survey, have declined to as little as 17% in July.
“The second quarter sales numbers provide solid statistical evidence of what we’ve been hearing anecdotally from real estate agents, buyers and investors over the past few months: there is a limited supply of available foreclosure inventory to choose from in many markets,” says Daren Blomquist, RealtyTrac's vice president. “Given this shortage of supply and the seasonally strong buyer demand in the second quarter, it’s no surprise that the average foreclosure-related sales price increased both on a quarterly and annual basis.
“Three straight months of increasing foreclosure starts through July may ease the inventory shortage somewhat in the coming months when many of these foreclosure starts translate into listed short sales or bank-owned homes,” Blomquist added. “The increase in short sales of properties that have not even started the foreclosure process indicates that lenders are moving further upstream to deal with their distressed inventory, thereby avoiding the increasingly complex and lengthy foreclosure process altogether.”
Third parties purchased a total of 117,131 bank-owned (REO) homes in the second quarter, down 13% from the previous quarter. REO sales accounted for 12% of all sales in the second quarter, the same percentage as in the first quarter but up from 11% of all sales in the second quarter a year ago.
Foreclosure sales accounted for 43% of all residential sales in both Georgia and Nevada in the second quarter, the two highest percentages among the states despite decreasing foreclosure-related sales activity in both states.
California foreclosure-related sales in the second quarter decreased 10% from a year ago, but still accounted for 40% of all residential sales in the state - the third highest percentage of any state.
The average price of a foreclosure-related sale in California during the second quarter was $248,676, up 4% from the previous quarter and also an increase of 4% from the second quarter of 2011.
Other states where foreclosure-related sales accounted for at least one in five sales in the second quarter were Michigan (35%), Arizona (33%), Illinois (27%), New Hampshire (24%), Colorado (22%), Wisconsin (22%), Minnesota (22%), Oregon (21%), and Florida (21%).