Report: Distressed RE Nears 20 Percent of Nationwide Sales

There are motivated home sellers, and then there are motivated home sellers. In this market, that term has taken on new meaning, capturing sales made under borrower duress as well as institutional sellers looking to sell off REO properties in an effort to clear their books. And the number of motivated sellers, by most accounts, has been growing pretty dramatically, pretty much in tandem with declining property values and mushrooming foreclosure totals. Evidence of that growth: motivated sales made up 18.9 percent of all home sales transactions in 25 key metropolitan statistical areas during May, according to data released Friday by Radar Logic Inc.; that total compares to 5.1 percent of transactions just one year ago. Distressed sales jumped 18.1 percent between April and May alone in hard-hit Phoenix, while in Miami, distressed sales rose 13 percent. The company’s price-per-square-foot data for 25 of the nation’s largest residential housing markets found that 23 registered year-over-year price declines during May, while only one — Milwaukee, WI — showed a perceptible jump in prices, rising 1.1 percent year over year. Sixteen MSAs saw prices fall between April and May, too; last year, just nine MSAs saw prices fall on a month-to-month basis. Leading the charge in annual price declines during May were Sacramento and Las Vegas, which saw prices-per-square foot fall 31.0 and 29.5 percent, respectively. Among the hardest hit MSAs, perhaps most surprising was the year-over-year decline in St. Louis, Missouri — where prices are off 26.9 percent versus year-ago levels, good enough to rate the MSA as the 4th worst nationally in the RPX index. A bump in transaction counts — that ever-important summer sales bounce — did materialize to some extent, even if prices continue to head south. Radar Logic said that 22 MSAs tracked demonstrated a seasonal increase in transaction counts. “Not surprisingly, the MSA price performance continues to be weak on a year-over-year basis,” said Michael Feder, CEO of Radar Logic. “We are seeing signs of buying in almost every market and are encouraged that the recently passed housing bill will only help.” RadarLogic publishes a set of housing prices, on a per-square-foot basis, that serve to drive the Residential Property Index, or RPX; the RPX is one of the tradeable property derivatives out there (the other being the Case-Shiller based housing futures). The graph below shows pricing trends across all MSAs, including motivated selling prices and transaction counts.