Distressed sales, which include real estate-owned (REOs) and short sales — accounted for 11.1 percent of total home sales nationally in April 2015, the lowest monthly share since the eve of the housing meltdown in 2007.
The share of distressed sales is down 3 percentage points from April 2014, and a 1.5 percentage point decrease from March 2015, according to CoreLogic.
Within the distressed category, REO sales accounted for 7.4 percent and short sales made up 3.7 percent of total home sales in April.
The short sales percentage fell below 4 percent in mid-2014 and has remained stable since then. At its peak in January 2009, distressed sales totaled 32.4 percent of all sales, with REO sales representing 27.9 percent of that share.
The trend away from REO sales is a big factor in improving home prices since bank-owned properties typically sell at a larger discount than short sales.
CoreLogic: “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 distressed sales share continues, the distressed sales share would reach that “normal” 2-percent mark in mid-2017.”
Michigan had the largest share of distressed sales of any state at 21.7 percent1 in April 2015, followed by Florida (21.7 percent), Maryland (19.9 percent), Illinois (19.8 percent) and Connecticut (19.3 percent).
Nevada had Largest Decline in Short Sales
Nevada had a 7.7 percentage point drop in its distressed sales share from a year earlier, the largest decline of any state. California had the largest improvement of any state from its peak distressed sales share, falling 57.8 percentage points from its January 2009 peak of 67.5 percent.
While some states stand out as having high distressed sales shares, only North Dakota and the District of Columbia are even close to their pre-crisis numbers (within one percentage point).
Of the 25 largest “Core Based Statistical Areas” (CBSAs) based on loan count, Orlando-Kissimmee-Sanford, Fla. had the largest share of distressed sales at 24.7 percent, followed by Miami-Miami Beach-Kendall, Fla. (23.8 percent), Tampa-St. Petersburg-Clearwater, Fla. (23.2 percent), Chicago-Naperville-Arlington Heights, Ill. (22.5 percent) and Baltimore-Columbia-Towson, Md. (19.8 percent).