During the peak of the mortgage crisis, foreclosed homes sold at a 25% discount on average, but the market is stabilizing and the price differentiation between a home’s foreclosed valued and original market value is beginning to narrow, FNC reported.
The real estate analytics firm released a Foreclosure Market Report Monday, saying home prices are rising in many metro areas while foreclosure prices are starting to bottom out, creating some price stability.
“The fact that we are seeing a combination of rising home prices and a bottoming out of foreclosure prices is a very good sign the housing recovery is taking hold,” said Dr. Yangling Mayer, FNC Senior Research Economist. “This is the very first time in the long housing recession that the two are happening at the same time.”
By the fourth quarter of 2012, the average foreclosure discount, which is a comparison between a foreclosed home’s market value and its final sales price, had dropped to 12.2%, compared to 25% during the peak of the downturn.
Single-family REO and foreclosure sales made up 18.1% of the market in the fourth quarter of 2012, down from 26.5% in the first quarter of the same year, FNC said.
In addition, the median foreclosure price stands at $93,000, while the median price for a non-distressed sale is hovering at $183,500, according to FNC.
Price discounts are still more dramatic at the lower end of the housing market, with discounts of roughly 18.4% for low-tier properties in the latest FNC report.
Michigan remains foreclosure dominant, with 56% of homes sold in the fourth quarter of 2012 classified as foreclosure sales.
The hardest hit states of Arizona (14.3%), California (19.8%), Florida (20.5%) and Nevada (13%) maintain foreclosure sale rates of roughly 13% to 20.5%, with Florida recording the most distressed property sales.
FNC notes that the Midwest cities of Detroit, Chicago, Cleveland and St. Louis still have the largest concentration of foreclosure sales overall.