Foreclosure Discount Falls to 7.7 Percent Nationally
Today Zillow released a new foreclosure discount analysis that takes a new approach to answering the question, “How much can I save by buying a foreclosure?” Nationally, the (bank-owned) foreclosure discount is 7.7 percent and is as high as 27.4 percent in Pittsburgh and as low as zero percent in areas ripe with demand and low on inventory.
“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” said Zillow Chief Economist Dr. Stan Humphries. “Additionally, in areas such as Phoenix and Las Vegas, where not long ago one out of every two homes sold was a foreclosure re-sale, buying a foreclosure is no longer just for investors.”
The Zillow approach compares the sale price of a foreclosure to the estimated, non-distressed sale price of the same home. Other reports compare the median sale price of all foreclosures sold in a given period with the median sale price of all non-foreclosures sold in the same period — an approach that does not control for issues such as size, location or other attributes of homes. Because foreclosed homes tend to be smaller and in lower-priced locations, prior research tends to overstate the discount on foreclosures relative to non-foreclosures. Zillow’s approach controls for those issues.
Did you know?
Zillow is now the only place where you can search for and find detailed information on pre-foreclosure and foreclosed homes – homes that are not yet listed for sale – for FREE. These properties cannot be found on any MLS. Just search for homes for sale on Zillow like you normally would, and use the filters to add foreclosed and pre-market homes to your search. You can also find out more information about the foreclosure process by visiting Zillow’s Foreclosure Help Center.