Housing

Baltimore, Chicago, Orlando Top Metros for January Distressed Home Sales

Paul Ausick

Published: April 7, 2016 11:55 am

Last Updated: January 13, 2020 11:02 am

U.S. sales of distressed homes totaled 11.2% of all homes sold in January of 2016, according to data published by CoreLogic. The total represents a 0.6 percentage point drop compared with January of 2015 and a decrease of 3.3 percentage points compared with December of 2015.

A distressed sale is a transaction involving a real estate-owned (REO) property or a short sale. In December, REO sales accounted for 7.8% of distressed home sales, and short sales accounted for 3.4% 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-2018.

The five states with the largest percentage of distressed sales were Maryland (19.9%), Connecticut (19.1%), Florida (18.0%), Michigan (18.0%) and Illinois (17.4%). North Dakota posted the smallest share of distressed home sales at just 2.5%. Nevada had a 5.1-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 59.6 percentage points from its January 2009 peak of 67.4%. Only North Dakota and Washington, D.C., remain close to pre-crisis levels of distressed sales.

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

• Baltimore-Columbia-Towson, Md. (20%)
• Chicago-Naperville-Arlington Heights, Ill. (19.8%)
• Orlando-Kissimmee-Sanford, Fla. (19.8%)
• Tampa-St. Petersburg-Clearwater, Fla. (19.7%)
• Las Vegas-Henderson-Paradise, Nev. (14.2%)

Las Vegas-Henderson-Paradise, Nev., had the largest year-over-year drop in its distressed share, falling by 5.4 points from 19.5% in January 2015 to 14.2% in January 2016.  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 10.5% in January 2016. The smallest percentage of distressed sales, 2.8%, occurred in the Denver-Aurora-Lakewood, Colo., metro area.