Sales of distressed properties surged in December as many banks resumed foreclosures following the suspensions prompted by robo-signing issues last fall, according to an industry study conducted by Campbell Surveys.
The company’s HousingPulse Distressed Property Index (DPI) recorded a sharp jump last month. The December DPI was 47.2 percent, reflecting the share of home sales transactions that involved distressed properties. December’s level was up from 44.5 percent in November and nearly matched the 47.5 percent peak recorded by the HousingPulse DPI in September, right before the robo-signing controversy came to light.
The National Association of Realtors also reported an uptick in distressed property sales but a significantly lower share of total transactions during the final month of last year. Data released by the trade group last week put the distressed piece of the pie at 36 percent of December’s existing home sales, up from 33 percent in November.
Campbell Surveys says distressed property sales were not distributed evenly around the country.
According to the company’s latest study, in the foreclosure-ridden state of California, 66 percent of all transactions tracked in December involved distressed properties. The combined area of Arizona and Nevada similarly suffered, with 62 percent of transactions being distressed.
However, in the southern states of Texas, Oklahoma, and Louisiana, only 29 percent of transactions were distressed, according to Campbell Surveys.
Separately, sales to first-time homebuyers continued at the high level of 37.7 percent of all transactions tracked in December, the company reported. That’s up from 34.4 percent in the months of September and October.
Campbell Surveys says fears of rising mortgage rates prompted first-time homebuyers to get off the fence and buy before another burst of interest rate-increases. At the same time, investors reduced their activity amid fears of falling house prices.
“The combination of increased property supply and growing homebuyer demand caused a blow-out month for home sales,” commented Thomas Popik, research director for Campbell Surveys. “We knew this was coming because average transactions for our survey respondents rose from 2.9 in November to 3.4 in December.”
Popik says the surge in homebuying, though, isn’t likely to last. “January and February are typically the slowest months of the year for homebuying,” Popik explained. “And we’ll still have a backlog of foreclosed homes coming on the market during the winter, so prices may come under pressure, too.”
Campbell’s HousingPulse survey polls more than 3,000 real estate agents nationwide each month to provide market data on home sales and mortgage usage patterns.