CoreLogic is reporting that REO, distressed home sales accounted for 9 percent of homes sold nationally in August 2015, the lowest since September 2007.

Distressed sales, which comprise real estate-owned properties (REOs) and short sales, accounted for 9.3 percent of total home sales nationally in August 2015, down 2.3 percentage points from August 2014 and down 0.4 percentage points from July 2015.

Within the distressed category, REO sales accounted for 6 percent and short sales made up 3.3 percent of total home sales in August 2015. The REO sales share was the lowest since September 2007 when it was 5.2 percent. The short sales share fell below 4 percent in mid-2014 and has remained in the 3-4 percent range since then. At its peak in January 2009, distressed sales totaled 32.4 percent of all sales, with REO sales representing 27.9 percent of that share. While distressed sales play an important role in clearing the housing market of foreclosed properties, they sell at a discount to non-distressed sales, and when the share of distressed sales is high, they can pull down the prices of non-distressed sales. There will always be some level of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in the distressed sales share continues, it would reach that “normal” 2-percent mark in mid-2018.

Maryland had the largest share of distressed sales of any state at 20.8 percent in August 2015, followed by Florida (20.3 percent), Michigan (19.9 percent), Connecticut (19.1 percent) and Illinois (18.7 percent). North Dakota had the smallest distressed sales share at 2.7 percent. Nevada had a 6 percentage point drop in its distressed sales share from a year earlier, the largest decline of any state. California had the largest improvement of any state from its peak distressed sales share, falling 58.7 percentage points from its January 2009 peak of 67.4 percent. While some states stand out as having high distressed sales shares, only North Dakota and the District of Columbia are close to their pre-crisis numbers (within one percentage point).

Of the 25 largest CBSAs based on loan count, Orlando-Kissimmee-Sanford, Fla. had the largest share of distressed sales at 23.4 percent, followed by Tampa-St. Petersburg-Clearwater, Fla. (21.9 percent), Miami-Miami Beach-Kendall, Fla. (21.9 percent), Baltimore-Columbia-Towson, Md. (21.2 percent) and Chicago-Naperville-Arlington Heights, Ill. (21.1 percent). Las Vegas-Henderson-Paradise, Nev. had the largest year-over-year drop in its distressed sales share, falling by 5.9 percentage points from 21.8 percent in August 2014 to 15.9 percent in August 2015. Riverside-San Bernardino-Ontario, Calif. had the largest overall improvement in its distressed sales share from its peak value, dropping from 76.3 percent in February 2009 to 11.4 percent in August 2015.

To see the full story, go to https://www.corelogic.com/blog/authors/molly-boesel/2015/11/distressed-sales-share-lowest-since-september-2007.aspx#.Vjw4ML9BCJE

REO Inventory Rising Once Again

CoreLogic reports that after reaching a trough in August of 2013 of 375,000 properties, the number of real estate owned (REO) properties increased 15 percent to 430,000 as of March 2014 (Figure 1). The increase in REO properties was broad based, rising in 46 states. While the increase was moderate nationally, some states had large increases. Idaho led the way with the stock of REO properties nearly doubling between August 2013 and March 2014. Maryland had the 2nd largest increase in the number of REO properties, which increased 78 percent, followed by Nevada (up 70 percent), Oregon (up 47 percent) and North Dakota (up 42 percent).

The rise in REOs across most states reflects several inter-related factors. The “robo-signing” scandal in the fall of 2010 caused servicers to delay the foreclosure process, increasing foreclosure timelines. The number of REO properties had been increasing until September 2010 when the issue became public and after September the flow of completed foreclosure immediately fell by one-third in October 2010 and remained lower. That caused a rapid fall off in the number of REO properties until very late 2011 and early 2012 when the number REO properties began to rise again. Not surprisingly, the rise in the number of REO properties coincided with the National Mortgage Settlement, which was signed in February 2012 and provided more clarity and standards on foreclosure resolutions which led to the rise in REO properties.

As lenders began to accelerate the foreclosure process in early 2012, investor demand for REO properties began to rapidly increase. Investor demand more than offset the acceleration of foreclosure resolutions and led to a rapid decline in the number of REO properties. However, investor demand began to drop off last September partly in response the twin impact of rapid price increases and the rise in mortgage rates. In addition, short sale activity reached its peak in late 2012 and early 2013 and began to decline in subsequent months due to the Mortgage Forgiveness Debt Relief Act of 2007. Some properties that may have avoided foreclosure as short sales are instead being foreclosed upon and contributing to the rise in the REO stock.

The combination of all these major factors began to coalesce during the fall of 2013 and led to a rise in the inventory of REO properties. While the level is lower than the peak in the crisis, it signals that the rapid improvement in the REO stock during the last two years is over and the market has entered a new phase as it continues to process the legacy of the foreclosure crisis.

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Kamel Properties, LLC an affiliate of Pools By Design, Inc. (Kenneth Larison, President) bought a 1,760 sq. ft. office condo at 7368 N La Cholla Blvd. in the La Cholla Corporate Center at La Cholla & Magee, for[mepr-show rules=”58038″]$265,000 (about $150 per foot). The property was bank owned by Compass Bank when it sold and will be owner occupied by buyer.

Pools By Design, a Tucson-based business, is in custom swimming pool designer and landscape construction company with 35 years experience in the industry. During Larisons’ years of experience he has worked as a designer, project manager, sales manager and general manager for three of the largest pool companies in the nation. He has been a leader in the industry with many design awards and achievements.

From the company’s website, Larison states, “My focus is on providing guidance based on my years of experience coupled with my commitment to conservation and intelligent design. So much of my success has come from a commitment to people, not only to my clients, but also my subcontractors, vendors and business professionals. Every day I ask people to perform above and beyond on my projects. I can only be successful if I provide the same willingness to serve.”

Larison started Pools by Design partly as a result of the changing market. Consumers must be selective to protect their investment. “Today our clients are looking for a higher level of service, attention to detail and a great value. At Pools by Design, that is our mission. We focus on providing excellent service while keep our overhead low. This creates happy customers, which makes for new business referrals. Lower operating costs are passed on as savings to our clients. It all works very well.”

David Montijo and Jeff Casper of CBRE in Tucson had marketed the property for $290,400 and handled the REO sale for Compass Bank. Maryanne Larison of Russ Lyon Sotheby’s represented the buyer.

Ken Larison can be contacted at (520) 797-6675. Dave Montijo is at (520) 323-5136 and Jeff Casper at (520) 323-5181. Maryanne Larison can be reached at (520) 742-1335.

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