Michigan, Florida, Illinois Lead Nation in Distressed Home Sales

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U.S. sales of distressed homes totaled 12.1% of all homes sold in March of this year according to data from CoreLogic Inc. (NASDAQ: CLGX) and published on the company’s blog. The total represents a 3.2-point drop since March of 2014 and a drop of 1.9% compared with February of this year.

A distressed sale is a transaction involving a real estate-owned (REO) property or a short sale. In March REO sales accounted for 8.4% of all home sales and short sales accounted for 3.4% of all sales in the month. At the peak of distressed sales in January 2009, 32.4% of all sales were distressed, including REO sales totaling 27.9% of all sales.

The CoreLogic report noted:

The ongoing shift away from REO sales is a driver of improving home prices since bank-owned properties typically sell at a larger discount than short sales. There will always be some amount of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in distressed sales share is maintained, the distressed sales share would reach that “normal” 2-percent mark in mid-2017.

The 5 states with the largest percentage of distressed sales were Michigan (22.1%), followed by Florida (22%), Illinois (20.1%), Maryland (19.5%), and Connecticut (19.1%).  Only North Dakota and Hawaii remain within one point of their respective pre-crisis distressed sales shares. Nevada had an 8-point drop in its distressed sales share from a year earlier, the largest decline of any state, and California had the largest improvement of any state from its peak distressed sales share, falling 57.6-points from its January 2009 peak of 67.5%.

Among the 25 largest metropolitan areas these 5 posted the largest percentage of distressed sales:

  • Orlando-Kissimmee-Sanford, Florida (24.6%)
  • Miami-Miami Beach-Kendall, Florida (24.2%)
  • Tampa-St. Petersburg-Clearwater, Florida (23.5%)
  • Chicago-Naperville-Arlington Heights, Illinois (22.9%)
  • Baltimore-Columbia-Towson, Maryland (19.2%).

Atlanta-Sandy Springs-Roswell, Georgia, had the largest year-over-year drop in its distressed share, falling by 8.8 points from 24.5% in March 2014 to 15.7% in March 2015.