U.S. sales of distressed homes totaled 9.4% of all homes sold in July of this year according to data from CoreLogic and published Thursday on the company’s blog. The total represents a 2.1% drop compared with July of 2014 and is flat compared with June of this year.
A distressed sale is a transaction involving a real estate-owned (REO) property or a short sale. In June REO sales accounted for 6.1% of all home sales and short sales accounted for 3.3% 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-2019.
The 5 states with the largest percentage of distressed sales were Florida (20.7%), followed by Maryland (20.6%), Michigan (20.2%), Connecticut (19.1%), and Illinois (18.9%). Only North Dakota and the District of Columbia remain within one point of their respective pre-crisis distressed sales shares. Nevada had a 6.4-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 58.6% from its January 2009 peak of 67.4%.
Among the 25 largest metropolitan areas these 5 posted the largest percentage of distressed sales:
- Orlando-Kissimmee-Sanford, Florida (23.8%)
- Miami-Miami Beach-Kendall, Florida (22.3%)
- Tampa-St. Petersburg-Clearwater, Florida (22.3%)
- Chicago-Naperville-Arlington Heights, Illinois (21.7%)
- Baltimore-Columbia-Towson, Maryland (21%).
Warren-Troy-Farmington, Michigan, had the largest year-over-year drop in its distressed share, falling by 6.6 points from 19.8% in July 2014 to 13.2% in July 2015. Riverside-San Bernardino-Ontario, California, had the largest overall improvement in its distressed sales share from its peak value, dropping from 76.3% in February 2009 to 11.7% in June 2015.