RealtyTrac reports that foreclosures accounted for 26% of all residential sales nationwide in 2010:
That year-end data also shows that foreclosures, on average, sold for 28% lower prices than non-foreclosure sales.
Keep in mind that when discussing residential foreclosures, the national average is very heavily influenced by a relative handful of states. Here are the hardest hit:
So how does Austin compare? Very favorably, actually.
In the Austin metro area, sales of foreclosed properties accounted for 13% of all residential sales in 2010 -- less than 1/4 of the rate in Nevada, and about half the national average. We also maintained remarkable market velocity -- an average of 72 days on market for all sales last year. Moreover, as I have reported many times (most recently in How Does Texas stack up in the Case-Shiller report?), market prices in the Austin area have continued to trend upward throughout the recession.
Against that backdrop, there is one somewhat counterintuitive feature in our 2010 sales performance: The average discount on foreclosure sale prices was more like 40%, compared to the 28% national figure mentioned above. That's really not all that surprising, though. The Austin-area foreclosure rate remains well below average, and foreclosures have generally been heavily concentrated in specific neighborhoods, so much of the metro area has been relatively unscathed. On average, across the metropolitan area, foreclosures have not pushed all sale prices downward to the extent that they did in the eleven states in the table above. That means that a foreclosed property -- often in poor to fair condition and in a neighborhood where values have been driven down -- that sells for appropriate market value is heavily discounted compared to homes in good condition in neighborhoods with few foreclosures.
Foreclosure activity in Austin is definitely higher than it was pre-recession, and there is no doubt that the effects of the recession and housing downturn have flattened home values here over the past few years -- prices are lower today than they would have been if the recession had not happened. All in all, though, Austin and Central Texas continue to contrast dramatically with the cities and states that so thoroughly dominate news about the housing sector.
For those interested in detail, here is the data for Austin from last year (click to enlarge):
2011 will remain a challenging year economically, and the housing sector will continue to struggle in the hardest hit areas, but signs of improvement appear more frequently, and Austin is poised to lead the recovery.
Culture and climate and lifestyle and economics together,
Austin is still a great place to be!