Housing

Maryland, Michigan, Florida Top States for October Distressed Home Sales

Paul Ausick

Published: December 29, 2015 1:35 pm

Last Updated: January 13, 2020 3:37 pm

U.S. sales of distressed homes totaled 10.2% of all homes sold in October of this year, according to data posted Tuesday by CoreLogic. The total represents a 2.0 percentage point drop compared with October of 2014 and an increase of 0.2 percentage points compared with September of this year.

A distressed sale is a transaction involving a real estate-owned (REO) property or a short sale. In October REO sales accounted for 6.9% of distressed home sales and short sales accounted for 3.3% of all sales in the month. At the peak of distressed sales in January 2009, 32.4% of all sales were distressed, including REO sales, totaling 27.9% of all sales.

The CoreLogic report noted:

While distressed sales play an important role in clearing the housing market of foreclosed properties, they sell at a discount to non-distressed sales, and when the share of distressed sales is high, they can pull down the prices of non-distressed sales. There will always be some level of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in the distressed sales share continues, it would reach that “normal” 2-percent mark in mid-2019.

The five states with the largest percentage of distressed sales were Maryland (20.3%), followed by Michigan (19.6%), Florida (19.3%), Connecticut (19.1%) and Illinois (17.9%). North Dakota posted the smallest share of distressed home sales at just 2.7%. Nevada had a 5.7-point drop in its distressed sales share from a year earlier, the largest decline of any state, and California had the largest improvement of any state from its peak distressed sales share, falling 59.1 percentage points from its January 2009 peak of 67.4%. Only North Dakota and Washington, D.C., are within one percentage point of pre-crisis levels of distressed sales.

Among the 25 largest metropolitan areas these five posted the largest percentage of distressed sales:

• Orlando-Kissimmee-Sanford, Fla. (21.8%)
• Tampa-St. Petersburg-Clearwater, Fla. (21.1%)
• Baltimore-Columbia-Towson, Md. (20.7%)
• Miami-Miami Beach-Kendall, Fla. (20.6%)
• Chicago-Naperville-Arlington Heights, Ill. (20.5%)

Warren-Troy-Farmington Hills, Mich., had the largest year-over-year drop in its distressed share, falling by 5.8 points from 18.1% in October 2014 to 12.3% in October 2015. Riverside-San Bernardino-Ontario, Calif., had the largest overall improvement in its distressed sales share from its peak value, dropping from 76.3% in February 2009 to 11.1% in October 2015.