RealtyStore, a provider of a broad variety of real estate listings, recently released a report outlining average selling prices for bank foreclosures. The company found the median price of bank foreclosures for sale in six select states list at an average of nearly 50 percent below recent median existing-home sale prices.
The states—Maryland, Massachusetts, Mississippi, Missouri, Nevada, and New Jersey—each were cited by the company as having the highest percentages of mortgages in default, past due 90-days or more as of the end of Q1 2014. Due to their higher default rates, these states pose a greater risk of adding “significant amounts” of REO inventory.
The company believes these newly added foreclosed properties could put further downward pressure on already depressed REO prices.
“Dramatic differences in the default level have been noted across the country’s regions. While the far West (California and Arizona) and the deep South (Florida) contained the largest number of mortgage defaults and foreclosures in recent years, loan default activity has spread to different states and regions,” the company said.
The Northeast had a large share of properties that are 90-days or more past due. Massachusetts and New Jersey topped the list with over 3 percent of mortgages. Maryland was close behind, posting roughly 3 percent of home loans 90-days or more past due. Mississippi led the South and the entire country with default rates over 4 percent.
“Using these high default states as focal points, RealtyStore analyzed the price points on current standing inventory of REO listings across each state. Results show the median list prices in each state gravitate to the low end of the price spectrum. On a regional basis, the median REO list prices range from 41 percent to 62 percent below their median existing-home sales prices in April,” the company found.
The report suggested that a “material opportunity” exists for homebuyers interesting in moving to lower cost markets or investing in low cost local real estate.