July 13, 2010
Nearly one-third of all residential properties sold in the first quarter of 2010 were foreclosure properties, according to Foreclosure Deals, an online lister of foreclosed homes for sale. Experts at the company believe that shows that people are continuing to turn to the foreclosure market as a plentiful source of low cost homes.
With 232,950 foreclosure homes sold during the first quarter, the total is down slightly from the final quarter of 2009, and down 33 percent from the total foreclosure homes sold in the first quarter of 2009.
The drop in total sales could be an indication of a shrinking market, but falling prices over the same period show that foreclosure homes can still be purchased at prices far below the national average. The price of a foreclosure during the first quarter was 27 percent below the average sale price of a traditional home sale.
"Buyers are attracted to foreclosures because they offer tremendous discounts," said James Foxx, a business analyst with Foreclosure Deals. "The numbers show that each year, the total number of foreclosures sold has increased, and that's not just a reflection of supply. They're very popular, and for good reason, there's no better investment value in real estate currently out there."
Rising foreclosure sales
According to statistics, foreclosure home sales did increase by 25 percent from 2008 to 2009, and over 320 percent since 2007. During the first quarter, foreclosures accounted for more than 50 percent of home sales in California, Nevada and Arizona. Foreclosure homes accounted for at least 33 percent of home sales in Michigan, Massachusetts, Florida, Georgia, and Illinois.
Bank-owned and real estate owned (REO) properties accounted for 19 percent of all residential sales during the first quarter, with an average market value discount of 34 percent. Pre-foreclosure homes -- homes in default -- accounted for 12 percent.
Ohio had the highest average discount on a foreclosed home in the first quarter, at 39.5 percent below market value. Close behind were Kentucky and Illinois at 39 percent, and California and Tennessee at 37 percent.
"The statistics show that buyers and investors are getting some great deals," said Foxx. "And you don't have to buy in the really tough markets, like Las Vegas, NV or Phoenix, AZ to find them."
The average discount on a foreclosure home nationwide has risen from 21 percent to 27 percent since 2006.
