Foreclosures hurt more than just those families who’ve lost their homes. They drag down the value of housing in entire neighborhoods.
And that’s bad news, too, for commercial real estate professionals. Real estate professionals want confident consumers. Consumers aren’t confident when the homes they own are declining in value.
Proof of foreclosure’s impact came earlier this month when RealtyTrac released its November 2013 U.S. residential and foreclosure sales report. According to this report, the median price of a distressed residential property — one either in foreclosure or owned by a bank — stood at $110,500 in November. That price is 39 percent lower than the median price of $181,500 for a non-distressed residential property.
Foreclosure properties have brought down the value of all residential properties. RealtyTrac says that the national median sales price of all residential properties across the United States — a figure that includes both distressed and non-distressed properties — came in at $169,000 in November. That’s up just 1 percent from October but 7 percent from November of 2012. This is the 19th straight month in which median home prices have risen on a year-over-year basis, according to RealtyTrac.
There were some other interesting facts from the RealtyTrac report. All-cash purchases accounted for 42 percent of all residential property sales in November, up from 38.8 percent in October. This is the highest level this figure has been at since RealtTrac began tracking all-cash purchases in January of 2011.
In the Midwest, Michigan led the way in this category with 49 percent of its residential sales being all-cash transactions.
The RealtyTrac report also found that institutional investor purchases represented 7.7 percent of all residential property sales in November, up from 6.3 percent a year ago. Columbus, Ohio, ranked as one of the markets with the highest share of institutional investor purchases.
Sales of bank-owned — or REO — homes accounted for 10 percent of all residential property sales in November, up from 9.4 percent during the same month one year earlier. Cleveland was one of the markets in which REO sales accounted for at least 20 percent of all sales.