- According to latest Aucction.com’s Distressed Market Outlook report, demand for distressed housing increased +24% in completed foreclosure auction volume in September
- Foreclosure sales rate at 7-year high
- REO bids-per-asset at all-time high
The nationwide foreclosure moratoria currently in place via the GSEs and CDC restrictions put in place in March due to the COVID-19 outbreak (but set to expire at the end of December) and other more localized moratoria throughout the country do not apply to legally vacant or abandoned homes.
That said, Auction.com’s most recent Distressed Market Outlook report indicates that the sales rate of foreclosed housing stood at a 7-year high in September and real estate owned (REO), or real estate owned by a lender, bids-per-asset also stood at an all-time high in September. Additionally, Auction.com reported that demand for distressed housing increased by some +24% via completed foreclosure auction volume in September.
Daren Blomquist, vice president of market economics with Auction.com and formerly with CoreLogic, said that much of the distressed properties in demand and/or already sold had been vacant prior to the pandemic outbreak. Since the outbreak, a smaller number of properties became vacant. “The longer homes sit in foreclosure limbo created by the foreclosure moratoria, the greater the likelihood that they become vacant.”
Blomquist predicts that foreclosure may grow to more than +1.1M by Q2 2021.
States with an above-average share of year-ago foreclosure volume in September included Colorado (92%), Oklahoma (86%), Arkansas (54%) and Indiana (49%). States with a below-average share of year-ago foreclosure volume included New York, Oregon and New Jersey (all at 0%) and Washington and Massachusetts (both at 5%).
In September, the foreclosure sales rate increase to a 7-year high of +55.6% with the average price relative to estimated full market value increasing to a +6.5% year high.
Blomquist noted that strong demand for distressed homes is connected to strong demand for retail housing and record low mortgage interest rates. Blomquist said, “It’s apparent that investors are very bullish on the long-term strength of the real estate market and are willing to take on the extra risk that comes with buying an (occupied/vacant) property in the midst of widespread eviction moratoria.”
Thanks to Auction.com and HousingWire.
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