Foreclosures Account for 23% of Home Sales in 2011

by on Foreclosures

Since the real estate market crash, foreclosure properties have made up a significant percentage of overall home sales each year, especially when compared to the number of foreclosure homes sold each year before 2006. Despite the increase, reports indicate that in 2011 the percentage of foreclosure properties sold actually declined to 2008’s level—which may initially be seen as improvement from the last couple of years.

According to the numbers, last year approximately 23% of all homes sold were foreclosures in comparison to under 1% in 2005. Although 23% is significantly larger than the 1% of 2005, it is important to remember that 2009 foreclosure sales reached nearly 1.1 million, which made up 37% of all home sales.

Taking all of this information into consideration, the 23% could be seen as an improvement as the percentage of foreclosure properties accounted for in the total number of properties sold last year is moving back toward pre-foreclosure crisis numbers as opposed to increasing. However, is the perception of improvement real or coincidental?

The Cause for the Decline

Now that we know that distressed properties made up less of the total number of homes sold in 2011, especially in comparison to 2009, we must take into consideration the reason for the decrease.

When thinking about the decreasing percentage, it is essential to remember that 2011 involved intense foreclosure settlement talks while lenders started better monitoring their foreclosure processes due to the robo-signing incidents that left many homeowners without their homes. The slower foreclosure process could have a lot to do with the decrease of foreclosure homes sold in 2011.

A Glimpse into the Near Future

Since the foreclosure settlement talks are no longer underway, many suspect that the foreclosure process will pick back up again, especially in non-judicial foreclosure states. Therefore, we could quickly see more foreclosure properties on the market over the next 6 months. With the increased number of short sales (due to many lenders encouraging short sales as opposed to foreclosure) and bank-owned properties on the market, it would not be surprising to see the 2012 percentage start to climb back toward the 2009 numbers as opposed to the 23% of 2011.

Opportunities for Home Buyers

But what, exactly, does all of this mean for homebuyers and investors? Opportunity! With the foreclosure settlement finally occurring and lenders pushing short sales, you can expect to see exceptional foreclosure and short sale investment opportunities in the near future. Keep your eyes peeled for the best deals as they are just around the corner.