REO, short sales down in Charlotte area

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The Charlotte area is seeing a fall in the number of distressed properties on the market, according to CoreLogic. The percentage of real estate owned and short deals among all home sales has dropped several percentage points this year and is lower than the national average.

According to CoreLogic, distressed sales in the Charlotte-Concord-Gastonia metropolitan statistical area made up 7.7 percent of total home sales in May, down from 10.5 percent in the same month last year. REO sales made up 4.1 percent of the total, while short sales amounted to nearly 3.6 percent. A year ago, those figures were at 5.5 percent and 5.1 percent, respectively.

Nationally, distressed sales comprised 9.9 percent of total sales, down from 12.6 percent in May 2014. REOs accounted for 6.4 percent, while short sales made up the remaining 3.5 percent. The REO sales share was at its lowest since October 2007, when it was 6 percent, CoreLogic reports.

A short sale is defined as a real estate sale in which the lender and borrower agree to sell the property for less than the amount due on the loan. It’s a way for the borrower to avoid a default on his credit report, while the lender avoids foreclosure fees. REO sales occur when the property reverts back to the lender, usually a bank or government agency, after an unsuccessful foreclosure auction.

At its peak in January 2009, distressed sales totaled 32.4 percent of all sales, with REO sales representing 27.9 percent of that share. According to CoreLogic, the pre-crisis share of distressed sales was traditionally about 2 percent. If the current year-over-year decrease in distressed sales share continues, the distressed sales share would reach that “normal” 2-percent mark in mid-2018.

Michigan had the largest share of distressed sales of any state at 21.4 percent in Mayl 2015, followed by Florida at 21.3 percent; Maryland  at 20.3 percent; Illinois at 19.4 percent; and Connecticut at 19.3 percent. Nevada had a 7 percentage point drop in its distressed-sales share from a year earlier, the largest decline of any state.

North Carolina had a 9.1 percent distressed-sale share in May, down from nearly 10.8 percent a year ago. REOs accounted for 4.2 percent of the share this year, with short sales comprising 4.9 percent.

California had the largest improvement of any state from its peak distressed-sales share, falling 58.1 percentage points from its January 2009 peak of 67.5 percent.

CoreLogic, based in Irvine, Calif., provides property information, analytics and data services.