Average Distressed Property Sells at 26% Discount; Inventory of These Properties Still Increasing
September 30th, 2010Via: Bloomberg:
Homes in the foreclosure process sold at an average 26 percent discount in the second quarter as almost one-fourth of all U.S. transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.
A total of 248,534 homes that sold in the period had received a default or auction notice or been seized by banks, RealtyTrac said in a report today. The number was up 5 percent from the first quarter and down 20 percent from a year earlier, according to the Irvine, California-based data seller.
“We’re still clearly building up more distressed inventory,” Rick Sharga, RealtyTrac’s senior vice president, said in a telephone interview. “That will either put downward pressure on prices or keep them from going up.”
The discount reflects the average sales price of homes in the foreclosure process compared with properties not in distress, according to RealtyTrac. About 24 percent of all homes sold were in some stage of foreclosure, down from 31 percent in the first quarter. The average price of a distressed property was $174,198, up from $171,971, the company said.
Foreclosures are adding to a swelling U.S. housing supply as an unemployment rate of 9.6 percent and the end of a federal homebuyer tax credit dampen purchases. Home seizures in August reached a record for the third time in five months, with more than 95,000 repossessions, RealtyTrac said earlier this month. Home prices dropped in July, the eighth consecutive year-over- year decline, the Federal Housing Finance Agency said Sept. 22.
