Sales of distressed properties continue to represent a diminishing share of the housing market as does the use of all-cash for housing purchase. Still CoreLogic, in its dual reports for October, estimates it will take more than another year before either type of sale regains its pre-crash balance.
Distressed sales accounted for 7.7 percent of all home sales in October with sales of bank-owned real estate (REO) accounting for 5 percent of the total and short-sales the remainder. This is down 2.9 percent from the October 2015 share and was the lowest share for any month since October 2007.
Distressed home sales hit a peak of 32.4 percent of all sales in January 2009. At that point sales of REO had a 27.9 percent share. CoreLogic puts the pre-crisis share of distressed sales at about 2 percent and projects the current level of those sales will reach that "normal" 2-percent mark in mid-2018.
The share of distressed sales fell in all but eight states. Maryland had the largest share of distressed sales of any state at 18.6 percent in October, followed by Connecticut (18.3 percent), Michigan (17 percent), New Jersey (15.8 percent) and Illinois (14.7 percent). Despite the continuing decline in distressed sales, only North Dakota and the District of Columbia are within 1 percentage point of their pre-crisis levels.
Cash sales accounted for 31.8 percent of all home sales in October, a decline of 2.7 percentage points from October 2015. Cash sales remain very high among sales of REO, with 59.2 percent of those sales closing without financing. However, since REO sales now make up such a small percentage of all sales, they no longer have much impact on the overall cash sales share. Resales had the next highest cash sales share at 31.7 percent, followed by short sales at 30.2 percent and newly constructed homes at 15.9 percent.
When cash sales peaked nationally in January 2011, they made up 46.6 percent of home sale transactions. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. If the cash sales share continues to fall at the same rate it did in October 2016, CoreLogic says that metric will also be back to pre-crisis levels by mid-2018.
The highest share of cash sales was again in Alabama at 47.5 percent, followed by New York (44.5 percent), Indiana (41.8 percent), Florida (41.5 percent) and Missouri (38.8 percent).
