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Distressed Sales Accounted for 14 Percent of Total Home Sales in January 2015

The Distressed Sales Share Has Fallen on a Year-Over-Year Basis Every Month Since July 2011

Molly Boesel    |    Mortgage Performance

Distressed sales (REO and short sales) accounted for 14 percent of total home sales nationally in January 2015, a 3.1 percentage point drop from January 2014 and a 0.8 percentage point increase from December 2014. Distressed sales shares are typically higher in January than they are in December due to seasonal factors. The January 2015 distressed sales share was the lowest for any month of January since 2008. Within the distressed category, REO sales made up 9.9 percent of total home sales in January 2015 and short sales made up 4.1 percent. At its peak, the distressed sales share totaled 32.4 percent of all sales in January 2009, with REO sales making up 27.9 percent of that share. The ongoing shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount than do short sales. There will always be some amount of distress in the housing market, so one would never expect a 0 percent distressed sales share, and by comparison, the pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in distressed sales share were maintained, the distressed sales share would reach that “normal” 2-percent mark in mid-2017.

Michigan had the largest share of distressed sales of any state at 23.1 percent1 in January 2015, followed by Florida (22.3 percent), Illinois (20.6 percent), Maryland (18.9 percent) and Connecticut (18.8 percent). Nevada experienced a 9.1 percentage point drop in its distressed sales share from a year earlier, the largest decline of any state. California experienced the largest improvement from the peak distressed sales share of any state, falling 57.1 percentage points from its January 2009 peak of 67.4 percent. While a few states stand out as having high distressed sales shares, very few states are even close to their pre-crisis distressed sales share. North Dakota, The District of Columbia and Hawaii are the only states within one percentage point of their respective pre-crisis distressed sales shares.

Of the largest 25 Core Based Statistical Areas (CBSAs) based on loan count, Miami-Miami Beach-Kendall, Fla. had the largest share of distressed sales at 24.5 percent, followed by Orlando-Kissimmee-Sanford, Fla. (24.4 percent), Tampa-St. Petersburg-Clearwater, Fla. (24 percent), Chicago-Naperville-Arlington Heights, Ill.(23.3 percent) and Las Vegas-Henderson-Paradise, Nev. (19.6 percent). Riverside-San Bernardino-Ontario, Calif. had the largest year-over-year drop in its distressed share, falling by 9.8 percentage points from 24.3 percent in January 2014 to 13.5 percent in January 2015. This California CBSA also had the largest overall improvement in its distressed sales share from its peak value. At its peak in February 2009, distressed sales made up 76.3 percent of all sales in Riverside compared to its January 2015 share of 13.5 percent.

[1] The distressed sales share for states and CBSAs listed in this report was calculated using sales from the past 12 months.

The views, opinions, forecasts and estimates herein are those of the CoreLogic Office of the Chief Economist, are subject to change without notice and do not necessarily reflect the position of CoreLogic or its management. The Office of the Chief Economist makes every effort to provide accurate and reliable information, however, it does not guarantee accuracy, completeness, timeliness or suitability for any particular purpose.

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