Foreclosure sales have been declining for more than a year, while short sales have been gaining ground, according to a CoreLogic economist.
“The gap between the two is rapidly narrowing. It is due more to the drop in REO sales,” said senior economist Sam Khater.
He noted that foreclosure or REO sales peaked at 25% of all single-family sales in February 2011. REO sales fell to a 16% share in March. Early data for April show foreclosure sales comprised just 13% of sales.
Meanwhile, short sale activity has been increasing and April data show these preforeclosure sales comprised 9.6% of all sales. Back in February 2011, short sales comprised 7.6% of all sales.
“Nationally REO and short sales are converging,” Khater said. But there are some markets where the short sales are higher. It tends to be higher in “highly distressed markets,” he said, where properties are deeply underwater. And in some judicial foreclosure states where the foreclosure timelines are extremely long and loss severity is greater due to the costs of advances, taxes and maintenance.
“We are seeing more short sales in judicial states,” the CoreLogic senior economist said. CoreLogic is based in Santa Ana, Calif.