U.S. sales of distressed homes totaled 11.1% of all homes sold in February of 2016, according to data published Thursday by CoreLogic. The total represents a 2.9 percentage point drop compared with February of 2015 and a decrease of 0.4 percentage points compared with January of 2016. Maryland posted the most distressed sales of any state at 19.9%.
A distressed sale is a transaction involving a real estate-owned (REO) property or a short sale. In February, REO sales accounted for 7.8% of distressed 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:
While distressed sales play an important role in clearing the housing market of foreclosed properties, they sell at a discount to non-distressed sales, and when the share of distressed sales is high, they can pull down the prices of non-distressed sales. There will always be some level 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 the distressed sales share continues, it would reach that “normal” 2-percent mark in mid-2018.
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