Foreclosures Nearly One-Quarter of All Home Sales

By:: Peter King | October 01, 2010

Nearly a quarter million homes in some stage of foreclosure were sold to new owners in the second quarter of 2010, accounting for nearly one-fourth of all home sales.

The bad news is that’s a 5 percent increase in total sales from the first quarter of the year. The good news is that it’s a 20 percent annual decrease from the second quarter of 2009. The figures were released this morning by the foreclosure data firm RealtyTrac.

More sales, but smaller market share

Despite the increase in actual sales, foreclosed properties actually made up a smaller share of all home sales due to a strong increase in traditional home sales driven by the homebuyer tax credit. Properties in foreclosure made up 24 percent of all residential sales in the second quarter, down from 31 percent in the first.

“While foreclosure sales increased in the second quarter, non-foreclosure sales increased even more, spurred on by the homebuyer tax credit that expired during the quarter,” said James J. Saccacio, chief executive officer of RealtyTrac. “That had the net effect of lowering foreclosure sales as a percentage of total sales during the quarter, but that may be a temporary dip as the removal of the tax credit could drive more buyers back to discounted short sales and REOs (foreclosed properties).”

About 60 percent of all foreclosure sales were properties that had been reclaimed by lenders, with the other 40 percent being short sales and other “pre-foreclosure” sales prior to the completion of the foreclosure process.

Foreclosures selling for one-third less

Bank-owned properties sold at a discount of nearly 35 percent discount compared to traditional home sales. The markdown for “pre-foreclosure” sales was a far more modest 13 percent.

The biggest markdowns were taken in Kentucky and Ohio, with average markdowns on bank-owned properties of 48 percent. Not far behind were New Jersey, California, New York and Pennsylvania, all of which had average markdowns of 45 percent or more.

Nevada had the highest percentage of foreclosure sales, with distressed properties making up 57 percent of all residential home sales. Arizona was second with 47 percent, followed by California with 43 percent.

The nation’s lowest rate of foreclosure sales was Iowa, with distressed properties making up only 4.43 percent of all sales, followed by Montana at 6.45 percent and New York at 7.49 percent, the last showing that there’s no relationship between foreclosure rates and markdowns.

Start here to compare mortgage rates from top lenders in our network

Call For Rates

800-419-1494

Speak to a lender now.

We will match calls to our toll free number with our network of lenders.

See Today's Rates

National Rates

Loan Type	Today	+/-
30 yr fixed	3.69
15 yr fixed	3.00
5/1 ARM	2.75

Rates may contain points

Compare Rates »

Browse Mortgage Rates

Featured Guides

Browse our comprehensive guides to popular topics related to mortgage and personal finance.

Real Estate Calculators

Mortgage Loan Directory and Information, LLC or Mortgageloan.com does not offer loans or mortgages. Mortgageloan.com is not a lender or a mortgage broker. Mortgageloan.com is a website that provides information about mortgages and loans and does not offer loans or mortgages directly or indirectly through representatives or agents. We do not engage in direct marketing by phone or email towards consumers. Contact our support if you are suspicious of any fraudulent activities or if you have any questions.

Mortgageloan.com is a news and information service providing editorial content and directory information in the field of mortgages and loans. Mortgageloan.com is not responsible for the accuracy of information or responsible for the accuracy of the rates, APR or loan information posted by brokers, lenders or advertisers.