One of the best indicators of the improving health of the housing market is the percentage of homes for sale that are distressed.
If there are a lot of them (short sales and REOs/foreclosures), they keep overall prices down — and it indicates that there’s still of lot of mess left to clean up. That was the case through the entire housing collapse.
As we recover, though, the percentage goes down. So we look at those numbers to get a rough, overall picture of the market … and hope to see fewer distressed properties out there.
All that said…
We only have October numbers for MRIS and Hampton Roads, but they do cover a large portion of Virginia.
In MRIS territory, distressed properties accounted for 31.2% of sales in October 2011, but only 20.7% in October 2012. (Short sales dropped from 15.2% of the market to 11.7%; foreclosures dropped from 16% to 9.1%.)
In Hampton Roads we don’t have the detailed breakdown, but distressed sales overall dropped from 33.2% of the market to 28.3%.
So it’s safe to say that foreclosures and short sales are making up less and less of Virginia’s housing market, and that’s one good sign of a solid and ongoing recovery.