Real Estate

CoreLogic: REO sales drop to lowest level since January 2007

Maryland holds largest percentage of distressed sales

Although the market will always have some level of distressed sales, it will no longer be at the same level witnessed during the financial crisis, with distressed sales now only counting for 11.2% of market sales, according to CoreLogic’s Data Brief report for January 2016.

To put this in perspective, the housing crisis saw a huge jump in distressed sales, growing from an average of 2% up to an astounding 32.4% in January 2009.

Of the distressed sales in January, real estate owned accounted for 7.8%, a drop of 20.2 percentage points since January 2009, according to the report.

This drop is about 2.9% less than January 2015 and is the lowest level of REO sales for January since 2007. Of the nation’s largest core based statistical areas, only two increased in distressed sales in January.

Although January’s distressed sales were up 0.6% from December 2015, annually they were down by 3.3%.

Distressed sales help clear the market of foreclosures, however they can cause problems if there are too many, according to the report. When the percentage of distressed sales is high, because these sales are typically lower than normal sales, they bring down the value of surrounding non-distressed sales.

If the current annual decrease continues, the market would reach its pre-crisis level of 2% distressed sales by mid 2018.

In January, Maryland had the largest percentage of distressed sales at 19.9%. Connecticut came in second with 19.1%, followed by Florida 18%, Michigan 18% and Illinois at 17.4%.

North Dakota had the smallest percentage of distresses sales at 2.5%. Nevada had the largest annual decline of distressed sales at 5.1%, and California had the best improvement, dropping 59.6% from its peak of 67.4%.

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