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Foreclosures continue to flood local housing market

Thursday - 1/26/2012, 4:53am  ET

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The only state with higher foreclosure prices than Virginia is Hawaii. (AP)

Darci Marchese, wtop.com

WASHINGTON - Foreclosures may not own the housing market, but they do continue to flood it.

According to Realty Trac, 20 percent of all homes sold nationwide in the third quarter of 2011 were foreclosures. That amounts to 221,536 homes.

That is fewer foreclosures selling at the same time one year ago. In the third quarter of 2010, foreclosures made up 30 percent of the market.

However, here's something to keep in mind. Realty Trac's Daren Blomquist says a healthy number of foreclosures on the market is 5 percent or less. So the current 20 percent represents an unhealthy and imbalanced market.

In Maryland, foreclosure sales made up nearly 13 percent of the overall market in the third quarter.

Maryland is seeing a decrease in the number of foreclosures selling, but it is not necessarily a sign of an improving housing market. Instead, Blomquist says it reflects the large number of foreclosures still working through the tedious court system.

"Secondly, the government there has been just more proactive in general in trying to prevent foreclosures," he said.

Blomquist says the result is "a log-jam of distressed properties that eventually are going to have to be sold on the market."

The average sales price for foreclosures in Maryland is higher than the national average of $165,322. Distressed homes sold for an average of $176,985. That is up slightly from the previous quarter.

Foreclosure sale prices are also increasing slightly in Virginia. Foreclosures sold for an average of $236,190, which is much higher compared to Maryland and much of the country. In fact, the only state that had higher foreclosure prices was Hawaii.

Foreclosures made up 14 percent of Virginia's market. Blomquist says there's a seven-month supply of bank owned properties in Virginia, meaning it would take seven months to sell the current batch of them. That is healthier than Maryland which has a 10-month supply. Nationwide, it grows to a 13-month supply.

Here's a complete look at Realty Trac's 3rd quarter findings.

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