Foreclosure sales accounted for more than a quarter of all transactions that took place during the first quarter, as buyers continue to capitalize on the bargain prices available with distressed properties.
Specifically, foreclosures accounted for a 26 percent share of all sales, according to a recent report from RealtyTrac. This is a notable increase from the previous quarter when the share was at 22 percent and slightly higher than a year earlier when foreclosures accounted for 25 percent of all sales.
"Foreclosure-related sales picked up in the first quarter, particularly pre-foreclosure sales where a distressed homeowner is selling to avoid foreclosure - typically via short sale," said RealtyTrac chief executive officer Brandon Moore. "Those pre-foreclosure sales hit a three-year high in the first quarter even as the average pre-foreclosure sales price dropped to a record low for our report."
Lenders approving more borrowers for short sales
Mortgage records indicate there were a total of 109,521 pre-foreclosure sales during the first quarter. This increase in distressed property sales is the result of a greater number of lenders approving prospective buyers at a more rapid pace, as the housing market enters its peak season for activity, Moore added.
Desert states retain top spots
On a state-by-state basis, pre-foreclosure sales increased in 27 states. Specifically, the report indicates that short sales increased 94 percent in Wisconsin, while surging 81 percent in Michigan. In addition, Georgia, which experienced a high rate of foreclosure after the housing market collapse, saw its pre-foreclosure sales rate rise 80 percent from a year earlier.
However, even though these states posted the highest annual increase in their sales rates, Nevada and California retained their top positions for the highest percentage of foreclosure sales during the first quarter.
Even though the sales rate of distressed properties increased, the average sales price decreased on both a quarterly and annual basis. During the first three-month period of 2012, the average price was $175,461, which is a 4 percent decline from the fourth quarter and 10 percent more affordable than a year earlier.
"Meanwhile the average price of a bank-owned home is stabilizing and even increasing in some areas where a slowdown in REO activity over the past year has resulted in a restricted supply of REO homes available," Moore said. "Still, REO sales did increase on a quarterly basis in 21 states, indicating that lenders are still working through a bottleneck of unsold REO inventory in many areas."