Distressed Properties 39% of Existing Homes Sales in 1Q 2011 – Investors Starting to Come Back to the Market

According to data released Tuesday by the National Association of Realtors, distressed properties – including REOs (bank-owned homes) and pre-foreclosure short sales – made up 39% of 1^st quarter existing-home sales in 2011. That’s up from 36% from the same quarter in 2010. Distressed Properties Sales now make up over 1/3 of all closed sales transactions with REOs garnering the largest percentage.


Overall, sales of previously owned homes rose to an annual rate of 5.14 million units during the first three months of this year. That pace is 8.3% higher than during the previous quarter and essentially flat – down just 0.8% – compared to the same period last year. With distressed homes grabbing such a large share of the market, the median home price in most areas continues to slide. As mentioned in previous blog articles, as distressed sales continue to increase it will continue to have a sustained “price depressing” effect on non-distressed inventory. All distressed properties typically sold at a discount of about 20% during the 1^st quarter of 2011.
The national median existing single-family home price was $158,700 in the 1^st quarter of 2011, down 4.6% from $166,400 in the 1^st quarter of 2010. The share of all-cash home purchases rose to 33% in the 1^st quarter of 2011 from 27% in the 1st quarter of 2010. Investors accounted for 21% of first quarter transactions.

Investors are finding their way back into the market and where the smart dollars should be headed is into the REO arena. Investors will find the largest statistical discount to fair market value in REOs and the greatest risk/reward ratio for their investment dollars. If you haven’t signed up to be a part of our REO Hot List, please email us at terryj@jamesregroup.com or contact us at 206.300.2693 so that we can add you to our list. We are securing tremendous opportunities for our investor clients in the marketplace and would love to be of service. We target distressed inventory all over King, Pierce and Snohomish County. All information is private and confidential.