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Over one-third of state's home resales foreclosure-related

IRVINE -- A total of 47,809 California properties in some stage of foreclosure or REO were sold during the third quarter -- an increase of 9.1 percent from the previous quarter, but down 12 percent from the third quarter of 2011, according to RealtyTrac’s 2012 U.S. Foreclosure & Short Sales Report.

Foreclosure-related sales accounted for 35.9 percent of all California residential sales during the third quarter, the second highest percentage of any state.

The average foreclosure sales price was $267,263, up 0.62 percent from the previous quarter and 9.3 percent from the third quarter of 2011.

Short sales of California properties not in the foreclosure process increased 16 percent from the previous quarter and were up 20 percent from the third quarter of 2011.

These sales accounted for an estimated 14 percent of all residential sales.

California pre-foreclosure sales increased 17 percent on a year-over-year basis while REO sales were down 37 percent.

“The shift toward earlier disposition of distressed properties continued in the third quarter as both lenders and at-risk homeowners are realizing that short sales are often a better alternative than foreclosure,” said Daren Blomquist, vice president of RealtyTrac.

“However, the scheduled expiration of the Mortgage Forgiveness Debt Relief Act at the end of this year could stifle this trend toward short sales," he said. "If that law expires as scheduled, homeowners who agree to a short sale could see their income tax jump significantly because the portion of the unpaid loan balance not covered by the short-sale proceeds will be considered taxable income in many cases.”

Foreclosure-related sales accounted for 54 percent of all residential sales in Modesto, Calif., the highest percentage of any of the nation’s 100 largest metropolitan statistical areas in terms of population.

Six other California metro areas were in the top 10 in terms of percentage of foreclosure-related sales: Stockton (53 percent); Riverside-San Bernardino-Ontario (47 percent), Sacramento (40 percent), Bakersfield (39 percent), Oxnard-Thousand Oaks-Ventura (36 percent) and Los Angeles/Long Beach/Santa Ana (34 percent).

Metro areas outside of California with percentage of foreclosure-related sales ranking among the top 10 were Atlanta (41 percent), Tucson, Ariz., (40 percent) and Phoenix (34 percent).

Nationwide, a total of 193,059 homes in some stage of foreclosure or REO were sold during the third quarter, an increase of 21 percent from the previous quarter, but still down 3 percent from the third quarter of 2011.

The report also shows that foreclosure-related sales accounted for 19 percent of all U.S. residential sales during the third quarter — down from 20 percent in the previous quarter, but the same level as in the third quarter of 2011.

Counter to the trend in recent years, resales of properties in some stage of foreclosure (pre-foreclosure sales) outnumbered sales of foreclosed, bank-owned properties in the third quarter.

A total of 98,125 pre-foreclosure sales occurred during the quarter compared to a total of 94,934 REO sales.

Homes in foreclosure or bank-owned sold at an average price that was 32 percent below the average price of a home not in foreclosure, up from a 29 percent discount in the second quarter and a 31 percent discount in the third quarter of 2011.

Pre-foreclosure sales increased 22 percent from the previous quarter and were also up 22 percent from the third quarter of 2011, while the average sales price decreased 3 percent from the previous quarter and was down 5 percent from a year ago.

REO sales increased 19 percent from the previous quarter, but were still down 20 percent from 2011's third quarter.

The average REO sales price decreased 7 percent from the previous quarter, but was still up 7 percent from the third quarter of 2011.

Short sales of properties not in the foreclosure process increased 15 percent from the previous quarter and were up 17 percent from 2011's third quarter.

These non-foreclosure short sales accounted for an estimated 22 percent of all residential sales, bringing the total distressed sale share to an estimated 41 percent for the quarter.

Non-foreclosure short sales prices in the third quarter fell short of the total amount of loans outstanding by an average of $82,312 per short sale.

For all short sales, including non-foreclosure and in-foreclosure properties, the sales price was short of combined loan amounts by average of $94,896 per short sale.

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