Foreclosure homes account for 25% of all transactions in 3Q

IRVINE (California): About 25% of all homes transacted in the third quarter (3Q) are foreclosure homes, with prices of these properties which are at various stages of foreclosure 32% lower than average properties, according to online foreclosure properties marketplace RealtyTrac.

The discount was an increase from 26% in the last quarter and 29% a year ago, it said in its 3Q 2010 US Foreclosure Sales Report.

The company said the number of foreclosure properties — default, scheduled for auction of bank-owned (REO) —  this quarter stood at 188,784, down 25% from the last quarter and 31% from a year ago, while prices of these properties averaged U$169,523 (RM533,997.45), falling 2.46% from the last quarter and slipping 0.44% from a year ago.

Meanwhile, regular properties were transacted at an average of US$249,721, up 6.42% from the previous quarter and up 4.36% from a year ago, while sales volume fell 29% from the last quarter and almost 31% from a year ago.

"The expiration of the homebuyer tax credit in the second quarter created a substantial dip in overall buyer demand in the third quarter," said RealtyTrac chief executive officer (CEO) James J Saccacio.

"Demand for foreclosures also dipped in the third quarter, but those who did purchase a short sale or REO during the quarter were able to get an average discount of more than 32% — the highest average foreclosure discount we’ve seen since the fourth quarter of 2005.

"The foreclosure-processing controversy, which was brought to light at the very end of the third quarter, could chill demand even further — particularly for foreclosure properties.

"A quick but responsible resolution to that issue would be ideal to help the market continue to properly clear out foreclosure inventory and get distressed properties into the hands of qualified buyers and investors who will likely add value to those properties and the neighborhoods they are in," he added.

RealtyTrac said 113,933 REO properties were sold to third parties in the third quarter, marking a 26% decline from the last quarter and a 35% drop from a year ago.

These properties accounted for 15% of all sales in 3Q, comparable to the previous quarter and the 16% of all sales reported a year ago.

REOs were discounted by 41% on average, higher than 34% in the last quarter and 35% a year ago.

Meanwhile, a total of 74,815 pre-foreclosure properties — in default or scheduled for auction — were sold to third parties in the third quarter, lower by 24% percent from the previous quarter and down 24% from a year ago.

These properties accounted for 10% of all properties transacted, a marginal increase from 9% in the last quarter and a year ago.

Often short sales, pre-foreclosure properties were usually sold 19% lower than average prices, up from 13% in the previous quarter and 18% a year ago.