Home/Mortgages/Foreclosure Inventory Would Take Three Years to Clear Out

June 1, 2011 (Jeff Alan)

With a current inventory of 1.9 million foreclosed homes, it would take three years to clear out the banks’ bustling inventory of foreclosed homes according to the latest data released by RealtyTrac. A total of 158, 434 U.S. properties that were in some stage of foreclosure were sold during the first quarter of 2011, a decrease of 16 percent from the fourth quarter of 2010, and a drop of 36 percent from the same quarter, a year earlier.

Homes that were in some stage of foreclosure, either a default, scheduled for auction, or bank-owned, accounted for 28 percent of all residential sales, slightly higher than the 27 percent seen in the previous quarter, and the highest percentage seen since first quarter of 2010 in which 29 percent of all residential sales were foreclosures.

The bustling foreclosure inventory continued to exert downward pressure on home prices, as the average sale price for foreclosed properties in the first quarter was $168,321, down 1.89 percent from the previous quarter.

“While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties sold to third parties,” said James J. Saccacio, chief executive officer of RealtyTrac. “While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery. At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure.”

Nevada continued to lead the country with the highest percentage of foreclosure sales as 53 percent of all residential sales were foreclosures. That is down slightly from the previous quarter, and down from 59 percent of all residential sales in the first quarter of 2010. Even with such a large proportion of foreclosed homes, the average foreclosed home sold for only 18 percent below the average sales price of a non-foreclosed home.

California and Arizona continued to get their name in the spotlight as foreclosure sales accounted for 45 percent of all residential property sales in both states in the first quarter. For California, that was an increase from 43 percent in the previous quarter and for Arizona that was down from 50 percent of all residential sales in the previous quarter.

Rounding out the top ten were Idaho (33 percent), Florida (32 percent), Michigan (32 percent), Oregon (32 percent), Virginia (30 percent), Colorado (30 percent), Illinois (29 percent).

Ohio had the highest average discount price difference between foreclosed and non-foreclosed homes at 41 percent, followed by Illinois with just under 41 percent and Kentucky which had an average discount of 39 percent.

Other states with average foreclosure discounts of more than 35 percent were Maryland, Tennessee, Wisconsin, Delaware, Pennsylvania, Oklahoma and Louisiana.

You can read the report in its entirety on RealtyTrac’s website.

Tags: RealtyTrac, Foreclosure Sales Report, foreclosures, average sales price, default, auction, bank-owned homes