Question: What are the latest foreclosure trends?
Answer:
The foreclosure auction market experienced a slowdown in Q4 2024, with the number of properties available at auction hitting a three-year low. Foreclosure auction volume was at just 42% of pre-pandemic levels, continuing a downward trend from 47% in Q4 2023. However, scheduled auctions began to rebound slightly, suggesting that activity could pick up in Q1 2025.
While overall demand fell in Q4, it began rising again in December, with the foreclosure auction sales rate increasing by 7% month-over-month. Notably, 59% of major metro areas saw year-over-year demand growth, signaling that investor interest in distressed properties remains strong in many regions.
On the pricing side, buyers have shown more willingness to meet seller expectations. The bid-ask spread—the gap between what buyers offer and what sellers accept—narrowed to 12 points in Q4, down from a two-year high of 14 points in Q3. The average winning bid at REO auctions rose to 56.2% of after-repair value (ARV), rebounding from a two-year low in the previous quarter. However, foreclosure auction winning bids dipped slightly to 55.8% of ARV.
Despite these signs of recovery, 35% of foreclosure auction buyers surveyed in early January said they were hesitant to purchase due to current market conditions. Still, with demand rising in key metro areas and pricing trends stabilizing, Q1 2025 could bring renewed activity in the foreclosure market.
