There's good and bad news on the foreclosure front: Foreclosure-related sales rose in the last quarter of 2011 but fell slightly year-over-year, according to RealtyTrac's latest U.S. foreclosure sales report.
During the fourth quarter of 2011, foreclosure sales accounted for 24 percent of all U.S. residential sales, up 4 percent in the previous quarter. Despite the increase, foreclosure-related sales fell 2 percent year-over-year.
Brandon Moore, chief executive officer at RealtyTrac, believes the quarter-over-quarter number is a better indicator of what's to come:
"Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures. Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year. We expect to see foreclosure-related sales [to] increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months."
"We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter," Moore wrote in a press release Thursday. He expects the trend to continue through 2012, as lenders recognize short sales as a better option for delinquent loans.
The average sale price of bank-owned homes and homes in foreclosure was $164,944 in the fourth quarter of 2011, down 5 percent from the same time in 2010. That's 29 percent below the sale price of a non-foreclosure home sold during the same quarter.
Short sales (where the home is sold for less than the amount of the mortgage) nationwide increased 15 percent year-over-year, accounting for 9 percent of all home sales in 2011.
The average sale price of a pre-foreclosure home was $184,221 in the fourth quarter of 2011, down 11 percent year-over-year and 21 percent below the price of a non-distressed home sold during the same period.
Short-sale homes sold in the fourth quarter had an average market time of 308 days.
Sales of REO homes (bank-owned foreclosures) decreased nationally by 12 percent year-over-year, and accounted for 14 percent of all home sales in 2011.
REOs sold for an average of $149,686 in the fourth quarter, down 2 percent year-over-year and 36 percent below the average sale price of a non-foreclosure home.
After completing the foreclosure process, REOs had an average market time of 175 days in the fourth quarter of 2011.
Nevada, California and Georgia had the highest percentage of foreclosure sales. Foreclosed or bank-owned homes accounted for 56, 43 and 39 percent of all home sales in those states. Foreclosure-related sales topped 20 percent in Arizona, Michigan, Colorado, Illinois, Minnesota, Washington and Florida.
Foreclosures continue to put downward pressure on the prices of non-distressed homes, but we can't begin a true housing recovery until we work through the distressed properties sitting on the market.