The high point (or statistical low point) was achieved after distressed home sales across the country fell by 2.9 percentage points from September 2016 to October 2016.
In fact, the number of distressed sales fell in all but eight states in the U.S. year-over-year.
Pop the champagne bottles; we’ve officially reached a normalized market when it comes to foreclosures and distressed sales, one we haven’t experienced since the mortgage crash and Great Recession.
Here are some other highlights of the recent findings:
At the peak of the foreclosure crisis in January 2009, distressed home sales accounted for 32.4 percent of all sales – just about one out of every three homes sold.
(Overall, about 14 million homes went into foreclosure, according to ATTOM Data Solutions.)
REO sales (Real Estate Owned) properties made up 27.9 percent of all sales at that point, meaning more than one out of every five sales was a bank-owned foreclosure.
However, as of October 2016, REO sales made up only 5 percent of total home sales in the U.S., a drop of nearly 23 percent since the dark days of 2009.
Additionally, short sales were down to only 2.6 percent of all home sales as of October 2016, a nominal amount.
Interestingly, Maryland had the biggest ratio (not total number) of distressed sales of any state with 18.6 percent in October 2016. Connecticut (18.3 percent), Michigan (17 percent), New Jersey (15.8 percent) and Illinois (14.7 percent) followed suit as the top-five for the most distressed sales.
Of the states with the lowest share of distressed sales, North Dakota stood out as the best in the country for lack of foreclosures and short sales with only 2.7 percent distressed sales.
While it’s encouraging that distressed sales have fallen to 2007 numbers, one statistical metric does not a recovery make, as there are still signs that we haven’t quite reached a normal market.
For instance, before the real estate and mortgage crisis, the historical average for distressed sales hovered around 2 percent annually. So while our 5 percent is a victory, it still falls short of business-as-usual.
Even with all of the states that have seen decreased, only North Dakota and the District of Columbia are within one percentage point of their pre-crisis levels for distressed sales.
And according to RealtyTrac, there are currently 873,373 properties in U.S. that are in some stage of foreclosure (default, auction or bank owned) – a significant number.
But it’s all moving in the right direction since based on the current year-over-year decrease in distressed sales numbers, we’ll reach that “normal” 2-percent mark some time in the middle of 2018.
How about in the Sacramento region?
For Sacramento, the percentage of distressed home sale shares fell from 9.9 percent as of December 2014 to only 6.4 percent in December 2015.
While we had one of the highest percentages of distressed property sales in the country during the recession, steadily growing real estate prices, robust redevelopment and economic growth have increased the value of homes and led to shrinking foreclosures and short sales.