REALTYTRAC: Foreclosure Auction Sales, Bank-Owned Sales Increase from Year Ago in October Even as Short Sales Decline

RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, hasreleased its October 2013 U.S. Residential & Foreclosure Sales Report, which shows that U.S. residential properties, including single family homes, condominiums and townhomes, sold at an estimated annualized pace of 5,649,965,  a 2 percent increase from the previous month and up 13 percent from October 2012.

Despite the nationwide increase, home sales continued to decrease on an annual basis for the third consecutive month in three bellwether western states: California (down 15 from a year ago), Arizona (down 13 percent), and Nevada (down 5 percent).

The national median sales price of all residential properties — including both distressed and non-distressed sales — was $170,000, unchanged from September but up 6 percent from October 2012, the 18th consecutive month median home prices have increased on an annualized basis.

The median price of a distressed residential property — in foreclosure or bank owned — was $110,000 in October, 41 percent below the median price of $185,000 for a non-distressed property.

“After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales,” said Daren Blomquist,vice president at RealtyTrac. “The combination of rapidly rising home prices — along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home — means short sales are becoming less favorable for lenders.”

Other high-level findings from the report:   

  • Short sales represented 5.3 percent of all sales, down from 6.3 percent in the previous month and down from 11.2 percent in October 2012 (see important note below on changes to short sale methodology).
  • States with the highest percentage of short sales in October included Nevada (14.2 percent), Florida (13.6 percent), Maryland (8.2 percent), Michigan (6.7 percent), and Illinois (6.2 percent). 
  • Foreclosure auction sales to third parties — a new category separated out in the report for the first time in October— represented 2.5 percent of all sales, down from 2.8 percent in the previous month but nearly twice the 1.3 percent in October 2012.
  • Markets with the highest percentage of foreclosure auction sales included Orlando (8.6 percent), Jacksonville, Fla., (8.6 percent), Columbia, S.C. (8.1 percent), Las Vegas (6.6 percent), Charlotte (6.1 percent), Miami (6.0 percent), and Tampa (5.7 percent). 
  • REO sales accounted for 9.6 percent of all sales, up from 8.9 percent in September and up from 9.4 percent in October 2012.
  • Markets with highest percentage of REO sales included Stockton, Calif., (24.4 percent), Las Vegas (23.8 percent), Cleveland (22.3 percent), Riverside-San Bernardino, Calif., (20.1 percent), Detroit (18.8 percent) and Phoenix (18.0 percent). 
  • Cash sales represented 44.2 percent of all residential sales in October, down from a revised 45.0 percent in September but up from 33.9 percent in October 2012.
  • States with percentage of cash sales above the national average included Florida (65.6 percent), Nevada (55.5 percent), Georgia (55.4 percent), South Carolina (53.9 percent), North Carolina (49.9 percent), Michigan (49.5 percent) and Ohio (49.2 percent). 
  • Institutional investor purchases represented 6.8 percent of all sales in October, a sharp drop from a revised 12.1 percent in September and down from 9.7 percent a year ago.
  • Markets with the highest percentage of institutional investor purchases included Memphis (25.4 percent), Atlanta (23.0 percent), Jacksonville, Fla., (22.2 percent), Charlotte (14.5 percent), and Milwaukee (12.0 percent). 
  • Markets with biggest increase in median home price included Detroit (up 38 percent), San Francisco (up 32 percent), Sacramento (up 30 percent), Atlanta (up 30 percent), and Jacksonville, Fla. (up 29 percent).

 Important methodology note: Starting with this October report, RealtyTrac has adjusted the methodology for the report as it concerns short sales — now applying a refined calculation to take into account the true loan balance secured by a home at the time of the sale, and additionally separating out of the short sale classification properties that sell at the public foreclosure auction short of the loan balance.

Related to this second change, RealtyTrac is now including a new category of distressed sale in the report: third-party foreclosure auction sales, which represent sales at the public foreclosure auction to third parties other than the foreclosing lender.

Definitions
Residential property sales: sales of single family homes, condominiums/townhomes, and co-ops, not including multi-family properties.

Annualized sales: an annualized estimate of the number of residential property sales based on the actual number of sales deeds received for the month, accounting for expected sales records for that month that will be received in future months as well as seasonality.

Distressed sales: sale of a residential property that is actively in the foreclosure process or bank-owned when the sale is recorded.

Distressed discount: percentage difference between the median price of distressed sales and a non-distressed sales in a given geographic area.

Bank-Owned sales: sales of residential properties that have been foreclosed on and are owned by the foreclosing lender (bank).

Short sales: sales of residential properties where the sale price is below the combined total of outstanding mortgages secured by the property.

Foreclosure Auction sales: sale of a property at the public foreclosure auction to a third party buyer that is not the foreclosing lender.

All-cash purchases: sales where no loan is recorded at the time of sale and where RealtyTrac has coverage of loan data.

Institutional investor purchases: residential property sales to non-lending entities that purchased at least 10 properties in the last 12 months.

 
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