Return to Normal Slows for Distressed Sales

Sales of distressed properties, an increasingly negligible portion of all home sales, slipped even further in August.  Sales of lender owned or REO properties constituted a 6 percent share and short sales accounted for another 3.3 percent.  The combined total of 9.3 percent was down 0.4 percentage points from July and was 2.3 percentage points lower than the share in August 2014.

The share of REO sales was the lowest since September 2007 when it was 5.2 percent however the short sale share has remained in the 3-4 percent range since mid-2014. While the share of distressed sales has diminished significantly since peaking at 32.4 percent in January 2009 the rate of decline seems to have slowed.  As recently as June CoreLogic was projecting that the share of distressed sales would return to a pre-crisis level of around 2 percent by mid-2017.  Last month and again this month that return to "normal" was projected as mid-2018.

Maryland had the largest share of distressed sales in August of any state at 20.8 percent followed by Florida (20.3 percent), Michigan (19.9 percent), Connecticut (19.1 percent) and Illinois (18.7 percent). Nevada had a 6 percentage point drop in its distressed sales share from a year earlier, the largest decline of any state.

Of the 25 largest CBSAs based on loan count, Orlando-Kissimmee-Sanford, led with a 23.4 percent share followed by Tampa-St. Petersburg-Clearwater (21.9 percent), Miami-Miami Beach-Kendall (21.9 percent), Baltimore-Columbia-Towson (21.2 percent) and Chicago-Naperville-Arlington Heights (21.1 percent).