A recent report from RealtyTrac on foreclosure filings, scheduled auctions, defaults and bank repossession found there were a total of 125,875 US properties in this position in April. This is a 3% increase on the previous month and is 9% higher than a year earlier.
This increase was mainly due to the rise in bank repossessions as these reached 45,168, up 25% compared to the previous month and up by 50% a year earlier to reach a 27 month high. The number of bank repossessions increased year on year for the second consecutive month. However this figure is still 56% lower than the peak rate of bank repossessions which was reached in September 2013. In addition, the increase in April was also boosted by a number of foreclosure auctions scheduled in October 2014. As a result many of these auctions are now taking place with properties going back to the foreclosing lender.
Overall, the article in RisMedia points out that figures for April are simply a continuation of what’s being called the ‘cleanup phase’ of the last housing downturn and do not indicate the start of a new housing crisis. The number of foreclosure starts is decreasing and nationwide these figures are consistently below pre-crisis levels. Typically a distressed sales would have a negative effect on the housing market, but experts point out that the increase in distressed inventory could have the reverse effect in the current market and may help stimulate sales during the spring and summer season. New listings are tending to be for middle to lower priced properties and they are being released into a seller’s market that has a low inventory. This should mean these distressed properties sell quickly and at a price that is closer to full market value.
During the first quarter of this year, bank repossessions sold for 87% of the estimated market value, but in certain markets the price achieved was much higher. Bank repossessions sold for a higher price in San Diego California, and in Charlotte, North Carolina achieving 100% of the market value, while properties in San Francisco, California and in Bakersfield, Carolina, and in Portland, Oregon achieved 97% of the average estimated market value.
It took an average of 243 days after the bank repossessed the property for it to be sold during the first quarter of this year, down from an average of 300 days for the last quarter in 2014 but up slightly from an average of 226 days for properties sold during the first quarter of last year.