U.S. homes in the process of foreclosure sold at an average 27% discount in the first quarter and purchases of distressed properties fell to less than half the peak set two years ago, according to RealtyTrac Inc.
The discount reflects the price of distressed properties relative to normal sales. A total of 158,434 homes that sold in the period received notices of default, auction or repossession, down 16% from the fourth quarter and 36% from a year earlier, RealtyTrac said in a report today. At that pace, it would take three years to clear the supply of distressed and bank-owned houses, the Irvine, California-based company said.
Foreclosures are luring all-cash buyers who demand discounts, pushing down the value of all properties. More than three-fourths of U.S. metropolitan areas showed price declines in the first quarter, with foreclosures and short sales accounting for 40% of all transactions, the National Association of Realtors said May 10.
About 1.9 million U.S. homes are in some stage of foreclosure, according to RealtyTrac. In the first quarter, the average sales price of a distressed property was $168,321 U.S., down 1.9% from the fourth quarter and 1.5% from a year earlier.
The average discount compared with sales of non-distressed homes was unchanged from the previous quarter and up from 26% in the first quarter of 2010.
Ohio had the biggest foreclosure discount, with an average 41%, followed by Illinois at more than 40% and Kentucky at 39%. States where the discount exceeded 35% included Maryland, Tennessee, Wisconsin, Delaware, Pennsylvania, Oklahoma and Louisiana, RealtyTrac said.
Bank-owned properties accounted for 107,143 sales in the quarter, down 11% from the fourth quarter and almost 30% from a year earlier. Sales of homes in default or scheduled for auction totaled 51,291, down almost 26% and 45%, RealtyTrac said.
The sum was less than half the peak of 348,629 distressed deals in the first quarter of 2009.
RealtyTrac sells default data from more than 2,200 counties representing 90% of the U.S. population.
