Distressed sales accounted for 9.9% of total home sales in March 2016, and real estate owned sales accounted for 6.8%, according to a recent report from CoreLogic.
The current REO sales are 21.1 percentage points below its peak of 27.9% in January 2009. They were down 2.4 percentage points annually, making it the lowest REO sales for March since 2007.
March distressed sales were down 2.7 percentage points from March 2015 and down 1.6 percentage points from February this year.
While distressed sales play an important role in clearing the housing market of foreclosed properties, they sell at a discount to non-distressed sales, and when the share of distressed sales is high, it can pull down the prices of non-distressed sales.
Before the housing crisis, distressed sales made up about 2% of the housing market. If annual decreases continue on their current coarse, distressed sales could reach pre-crisis levels by mid-2018, according to the report.
Only eight states didn’t report lower distressed sales in March compared to last year. Maryland had the largest share of distressed sales at 19.8%. Connecticut came in second at 18.9%, followed by Michigan at 18.1%, Florida at 17% and Illinois at 16.7%.
The state with the lowest share of distressed sales North Dakota at 2.4%. Oil states such as Texas, Oklahoma and North Dakota continued to see decreases in distressed sales.
This chart shows the amount of distressed sales compared to the total market sales:
Click to Enlarge