A strong rip current of distress continues to threaten the U.S. housing market despite the absence of a giant wave of bank foreclosures in 2012.
There’s no doubt that the great foreclosure wave of 2012 just didn’t happen. No mighty financial dams fell and no monetary levees were washed aside.
Certainly that’s still a huge number of bank repossessions by historical standards. In 2005 and 2006 there were less than 270,000 REOs per year. But it’s 19 percent below the 800,000 REOs in 2011 and 35 percent below the peak of more than 1 million REOs in 2010.
According to the National Association of Realtors, “distressed homes undefined foreclosures and short sales sold at deep discounts undefined accounted for 24 percent of October sales (12 percent were foreclosures and 12 percent were short sales), unchanged from September; they were 28 percent in October 2011.” Foreclosures sold for an average discount of 20 percent below market value in October, while short sales were discounted 14 percent.” (Parenthesis theirs)
