Maryland, Connecticut, Florida Top States for November Distressed Home Sales

Housing

Published: January 27, 2016 11:54 am

Last Updated: January 13, 2020 2:30 pm

U.S. sales of distressed homes totaled 11.9% of all homes sold in November of this year, according to data posted Wednesday by CoreLogic. The total represents a 1.9 percentage point drop, compared with November of 2014, and an increase of 1.7 percentage points compared with October of 2015.

A distressed sale is a transaction involving a real estate-owned (REO) property or a short sale. In November, REO sales accounted for 8.7% of distressed home sales and short sales accounted for 3.2% 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 (20.2%), Connecticut (19.1%), Florida (19.0%), Michigan (18.9%) and Illinois (17.8%). 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 59.2 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. (21.2%)
Tampa-St. Petersburg-Clearwater, Fla. (20.7%)
Baltimore-Columbia-Towson, Md. (20.4%)
Chicago-Naperville-Arlington Heights, Ill. (20.4%)
Miami-Miami Beach-Kendall, Fla. (20.3%)

Las Vegas-Henderson-Paradise, Nev., had the largest year-over-year drop in its distressed share, falling by 5.5 points from 20.3% in November 2014 to 14.8% in November 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 10.9% in November 2015. The smallest percentage of distressed sales, 3.1%, occurred in the Denver-Aurora-Lakewood, Colo., metro area.