Sales of foreclosed or other distressed homes are flirting with the peaks of the housing crisis in early 2009 when heavy inventory was pressuring home prices lower, according to First American CoreLogic.
Distressed sales accounted for 29 percent of all sales in January, the highest since April 2009 and just shy of the 32 percent seen in January 2009, the mortgage data company said on Thursday.
Distressed transactions have a strong negative influence on home prices, according to First American, which noted the lows in prices for 2009 coincided with a peak in bank-owned property sales. Distressed sales include short sales, in which lenders allow a home to sell for less than the outstanding debt.
The trend is worrisome to economists who have warned that federal home loan modification efforts and foreclosure moratoriums would result in a backlog of homes hitting the market, forcing prices lower and hurting the economy.
This shadow supply late in 2009 was estimated at seven million units by Amherst Securities Group.
Riverside, California and Las Vegas, Nevada had the largest percentage of distressed sales in January at 62 percent and 59 percent, respectively, First American said.