'Distressed' home sales near '09 peak
Riverside, Calif., and Las Vegas see the most sales of foreclosed homes or homes sold short. The trend could add pressure to home prices.
First American CoreLogic, a subsidiary of title-insurance company First American (FAF), said distressed sales accounted for 29% of all sales in January.
Distressed transactions have a strong negative influence on home prices, according to First American.
The lows in prices for 2009 coincided with a peak in bank-owned property sales. Distressed sales include short sales, in which lenders allow a home to sell for less than the outstanding debt.
The trend is worrisome to economists who have warned that federal home loan modification efforts and foreclosure moratoriums would result in a backlog of homes hitting the market, forcing prices lower and hurting the economy.
This "shadow supply" late in 2009 was estimated at 7 million units by Amherst Securities Group.
Riverside, Calif., and Las Vegas had the largest percentage of distressed sales in January at 62% and 59% of total sales in those markets, respectively, the report said.
California, Nevada and Florida had the biggest shares of distressed sales.
There's a big gap between sale prices for properties sold without any loan problems and distressed sales, First American said.
The average non‐distressed market‐sale price in January was $247,700, but the distressed average price was $161,600. The average REO price was $141,900, compared to $215,300 for short sales.
The discount between market sales and distressed sales is currently about one‐third and has been running at the low‐to‐mid 30% range in the last 12 months, First American said.
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