Foreclosures and Short Sales at Lowest Levels in 4 Years

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According to RealtyTrac's September and Q3 2014 Residential & Foreclosure Sales Report, which shows that U.S. residential properties, including single family homes, condominiums and townhomes, sold at an estimated annual pace of 4,402,741 in September 2014, a decrease of 1 percent from August 2014 and a decrease of 19 percent from a year ago.

The median sales price of U.S. residential properties -- including both distressed and non-distressed sales -- was $195,000 in September, up less than 1 percent from August and up 15 percent from September 2013. September was the 30th consecutive month where U.S. median home prices increased on an annual basis, and the 15 percent annual increase is the biggest annual percentage increase since October 2005.

"Median home prices nationally in September were boosted by a new low in the share of distressed sales during the third quarter, resulting in fewer home sales on the lower end," said Daren Blomquist, vice president of RealtyTrac. "The share of homes selling above $200,000 is up 7 percent from a year ago, and the share of homes selling above $500,000 is up 15 percent from a year ago.

"Some of the biggest increases in median prices are in markets in the Midwest, Southeast and Inland California, where home prices are still considered a relative bargain for both investors and owner-occupant buyers," Blomquist added. "Meanwhile, many of the fastest-appreciating real estate markets last year have now settled into a more sustainable pattern of single-digit appreciation."

Markets back to single-digit appreciation, markets with biggest annual appreciation

Median home prices increased less than 10 percent from a year ago in 59 of the 102 metropolitan statistical areas with a population of 500,000 or more tracked in the report. Major metros with single-digit appreciation included Los Angeles (9 percent increase), where annual home price appreciation has been in single digits for four consecutive months; Phoenix (6 percent increase), where annual home price appreciation has been in single digits for six consecutive months; San Diego (7 percent increase), where annual home price appreciation has been in single digits for four consecutive months; Denver (6 percent increase), where annual home price appreciation has been in single digits for nine consecutive months; and Portland (7 percent increase), where annual home price appreciation has been in single digits for five consecutive months.

"We are experiencing the normal seasonal slowdown, but the market is still very strong in Northern Colorado," said Doug Dodds with RE/MAX Alliance, covering the Denver, Colo. market.  "Our feeling is that prices will not deflate but rather level off at least until spring."

Markets with the biggest annual increases in median home prices in September included Detroit (35 percent increase), Austin, Texas (28 percent increase), Cincinnati (27 percent increase), Cleveland (25 percent increase), Stockton, Calif., (21 percent increase), Miami (18 percent increase), and Charlotte (15 percent increase).

Short sales and bank-owned sales at lowest level since first quarter of 2011

Short sales and distressed sales -- in foreclosure or bank-owned -- accounted for 12.7 percent of all sales in the third quarter, down from 14.2 percent in the previous quarter and down from 14.5 percent in the third quarter of 2013 to the lowest level since RealtyTrac began tracking short sales and distressed sales combined in the first quarter of 2011. Metro areas with the highest share of combined short sales and distressed sales were Las Vegas (34.9 percent), Stockton, Calif., (31.8 percent), Modesto, Calif., (31.2 percent), Lakeland, Fla., (26.1 percent), and Jacksonville, Fla., (26.1 percent).

Short sales nationwide accounted for 3.8 percent of all sales in the third quarter, down from 4.2 percent of all sales in the second quarter and down from 4.7 percent of all sales in the third quarter of 2013 to the lowest level since the first quarter of 2011. Metros with a high percentage of short sales in the third quarter included Las Vegas (10.5 percent), Lakeland, Fla., (10.4 percent), Cape Coral FL (10.4 percent), Orlando (10 percent), Tampa (9.7 percent), Miami (9.2 percent), Palm Bay (9 percent), Jacksonville (8.4 percent) and Sarasota (8.2 percent).

Sales of bank-owned properties nationwide accounted for 7.8 percent of all sales in the third quarter, down from 8.8 percent of all sales in the previous quarter and down from 9.0 percent of all sales in the third quarter of 2013 to the lowest level since the first quarter of 2011. Metro areas with the highest percentage of bank-owned sales in the third quarter were Stockton, Calif., (26.1 percent), Modesto, Calif., (25.2 percent), Las Vegas (23.2 percent), Riverside-San Bernardino, Calif., (19.7 percent), Bakersfield, Calif., (18.5 percent), Phoenix (18.5 percent) and Sacramento (16.2 percent).

Sales at the public foreclosure auction accounted for 1.1 percent of all sales nationwide in the third quarter, down from 1.2 percent in the previous quarter but up from 0.9 percent in the third quarter of 2013. Metro areas with the highest percentage of auction sales in the first quarter were Lakeland, Fla., (4.9 percent), Miami (3.9 percent), Orlando (3.7 percent), Palm Bay-Melbourne-Titusville, Fla., (3.5 percent) and Tampa (3.4 percent).


Distressed properties sold 37 percent below non-distressed properties in September

The median sales price of a distressed residential property -- in foreclosure or bank-owned when sold -- was $130,000 nationwide in September, 37 percent below the median non-distressed sales price of $205,000.

Major markets with the biggest percentage difference between distressed and non-distressed median prices were Pittsburgh (72 percent), Milwaukee (67 percent), Cleveland (64 percent), and Memphis (59 percent).

"Even as the share of distressed sales decreases, the average discount on distressed properties continues to be substantial because the primary factors driving that discount are still in place," said Blomquist. "Distressed properties are typically in poor condition and have a highly motivated seller - whether that seller is the distressed homeowner in foreclosure or the bank that has repossessed the property through foreclosure."