Discounted Foreclosures Account for 25% of Home Sales in Third Quarter

by Jann Swanson on December 2, 2010

Homes that have been foreclosed or are in the process of foreclosure represented 25 percent of all home sales in the country during the third quarter of 2010 according to the quarterly U.S. Foreclosure Sales Report™ released by RealtyTrac on Thursday.  This is an increase of 1 percent from the market share held by foreclosed properties during the second quarter.

During the quarter a total of 188,748 properties in some state of foreclosure - default, scheduled for auction, or bank-owned - sold to third parties.  This was a decrease of 25 percent since last quarter, reflecting an overall drop in sales following the expiration of the homeowners' tax credit at the end of June.

The volume of sales, however, is not the only measure of the impact of foreclosed homes on the real estate market.  Distressed homes sold, on average, at a 32 percent discount from the sales price of homes not involved in foreclosure.     In the 2nd quarter foreclosure discounts were 26 percent vs. 29 percent one year ago.  Perhaps the good news here is that this was a reflection of an improvement in the general market more than an indication of falling prices in the distressed market.  The average sales price of a foreclosure impacted property was $169,523, 2.3 percent lower than in Quarter 2 and 0.44 percent less than a year earlier while the price of market value home was $249,721, 6.42 percent higher than the previous quarter and 4.36 percent higher than the third quarter of 2009.