Distressed Property Sales Account for One Third of All Home Sales

By Kyle Chezum Updated on 5/26/2011

 

Foreclosures have long made up a significant portion of all home sales.  Real estate professionals and even many consumers have kept track of distressed home sales for months now in order to anticipate average home value shifts in their regions, and prices have largely declined across the nation as more and more undervalued foreclosed properties enter the marketplace.  Real estate data firm RealtyTrac has now released a report showing the true expanse of the distressed property issue.

According to the report, distressed home sales accounted for 28% of all home sales in the first quarter of this year, up from lower levels at the end of last year.  Prices on foreclosed properties have decreased as well, inching down by almost 2% already this year.  This decrease in prices has driven the average sale price for foreclosed properties 27% lower than the average sale price for standard market properties.  It's easy to see why a large inventory of foreclosed homes has a downward pull on home values overall.

But the news is actually good.  Distressed property sale levels aren't nearly as high as they were in past year during the height of the financial crisis.  CEO of RealtyTrac James Saccacio says, "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."

Still, the high number of foreclosure sales is "delaying the housing recovery," according to Saccacio.  He estimates it will take at least three years to clear all the foreclosed properties from the marketplace, and that's if they continue selling at the current pace.