NEW YORK (MainStreet) — Distressed properties accounted for 31% of all residential sales in the U.S. in the second quarter of 2011, up from 24% in the second quarter of 2010, according to RealtyTrac, a firm that monitors the foreclosure market.
Additionally, short sales (when a property is intentionally sold at a loss in order to avoid foreclosure) increased by 19%, with a total of 102,407 homes either in default or scheduled for auction in the second quarter.
The number of bank-owned homes sold to third parties was up 6% from a revised first quarter total but down 11% from the second quarter of 2010 with a total of 265,087 homes in foreclosure or bank-owned nationwide in the second quarter.
“The high number of short sales indicates that lenders are getting serious about clearing these properties off of their books without going through the long, expensive foreclosure process,” Rick Sharga, senior vice president of RealtyTrac, told MainStreet. He explained that the increase in both foreclosure sales and short sales are a “glimmer of positive news” following months of data that indicated distressed properties were not being removed from the housing market quickly enough.
And that’s not all – while home prices are still down, the data show some hope for prices once the market is cleared of distressed properties.
According to RealtyTrac, the average sale price of homes in some stage of foreclosure was $164,217 in the second quarter, down less than 1% from the last quarter and down nearly 5% year over year. The average sale price for bank-owned homes or those in foreclosure was 32% below the average sales price of homes not in foreclosure.
However, Sharga said when RealtyTrac took out the sale price of foreclosure properties, it saw some appreciation in the sale prices of non-foreclosure properties both quarter over quarter and year over year. That fact suggests that once the majority of houses in default are off the market, the values of homes should go back up.
State by state, foreclosure-related sales accounted for 65% of all residential sales in Nevada during the second quarter, which has the highest percentage of any state. Arizona had the second-highest with distressed properties accounting for 57% of all sales during the second quarter. California was third with homes in foreclosure accounting for 51% of sales.
Other states where foreclosure-related sales accounted for at least 30% of all sales were Michigan (41%), Georgia (38%), Colorado (36%), Florida (35%), Illinois (34%), Oregon (33%) and Idaho (30%).