Distressed Property Sales Down, but still remain

Much has been written about the falling inventories of distressed properties in many market areas. Some have looked at the decreasing percentage of distressed property sales reported by the National Association of Realtors over the last four months as a sign that we are finally cleaning out the last remnants of the foreclosures. If you look at the numbers, it could seem that way:

  • March: 40% of all sales were distressed properties
  • April: 37% of all sales were distressed properties
  • May: 31% of all sales were distressed properties
  • June: 30% of all sales were distressed properties

However, in reality the falling percentage of distressed property sales is not always an accurate indicator. The reason the percentages may be falling is because some homes are currently tied up in the process of foreclosure.

In an article posted on HousingWire as quoted by James Zeldin, EVP Default Resources:

“I would absolutely expect an increase in inventory over the next 12 to 18 months. I’m personally expecting that a lot faster. I believe we’re going to see macro forces pushing these institutions to do more REO liquidation.”

Once these properties are cleared through the foreclosure process, the inventories of distressed homes will again increase and the percentage of sales will again begin to climb.

The end result

Currently we are working our way through large numbers of distressed properties every month. However, there are many more which will come to market in the next year to eighteen months.

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