Distressed Sales Share Falls to Lowest Level in Eight Years

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Distressed sales (short sales and REO properties property sales) accounted for just 12.7 percent of residential real estate transactions nationwide in 2014, the lowest share since 2007, according to Black Knight’s February 2015 Mortgage Monitor released today.

The share of distressed sales for 2014 was down from 17 percent reported for 2013, according to Black Knight. The distressed sales share reached its peak in 2011 when they accounted for 33 percent of all residential real estate transactions.

Despite the decline in short sales, traditional market sales outpaced their 2013 levels and reached their highest level since 2007, according to Black Knight.

Short sales declined by 45 percent year-over-year in 2014, and REO sales dropped by 16 percent. The average short sale discount for 2014 was 23 percent, meaning properties sold in short sales for an average of 77 cents on the dollar as compared to traditional market sales. The short sale discount reached its peak of 25.3 percent in July 2013.

By comparison, the REO discount is on the rise, increasing up to 27 percent – its highest level since Q4 2012, according to Black Knight. The peak for REO discounts was 29 percent, reached in April 2009.

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