Stabilization of the housing market has helped narrow the price gap between a home’s foreclosed value and its original market value, real estate analytics firm FNC Inc. revealed in its Foreclosure Market Report released Feb. 18.
Data from the fourth quarter of 2012 showed that the average foreclosure discount, which is a comparison between a foreclosed home’s market value and its final sales price, had dropped to 12.2 percent. At the peak of the mortgage crisis, the discount had been as much as 25 percent.
The report noted that many metro areas are beginning to see rising home prices and foreclosure prices are starting to bottom out.
“The fact that we are seeing a combination of rising home prices and a bottoming out of foreclosure prices is a very good sign the housing recovery is taking hold,” Dr. Yangling Mayer, FNC senior research economist, said. “This is the very first time in the long housing recession that the two are happening at the same time.”
Single-family foreclosures made up 18.1 percent of home sales in the fourth quarter, down from 26.5 percent in the first quarter of 2012.
The median non-distressed home sales price was $183,500 during the fourth quarter while the median foreclosure sale price was $93,000. Homes at the lower end of the market still have far greater foreclosure discounts than average at roughly 18.4 percent.
Michigan is the only state where foreclosures dominated home sales, with 56 percent of sales in the fourth quarter classified as foreclosures.
The Midwest in general is still seeing a significant number of foreclosures; Chicago, Cleveland, Detroit and St. Louis still have the largest concentration of foreclosure sales.
Hard-hit regions outside the Midwest include Florida, which classified 20.5 percent of all home sales as foreclosures, as well as California (19.8 percent of sales classified as foreclosures); Arizona (14 percent); and Nevada (13 percent).
Read the Foreclosure Market Report.