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Sales of distressed homes fell in third quarter

By Andrew Gomes

LAST UPDATED: 2:14 a.m. HST, Dec 2, 2010

Even as foreclosure activity in Hawaii reached a record high in the third quarter, the number of homes sold out of foreclosure declined.

By the numbers

Five states with the highest percentages of foreclosure sales in relation to all home sales in the third quarter:
1. Nevada 54%
2. Arizona 47%
3. California 40%
4. Florida 37%
5. Massachusetts 35%
27. Hawai 12%
Source: RealtyTrac data from 39 states
Real estate research firm RealtyTrac said sales of Hawaii homes involved in foreclosure fell 28 percent to 404 in the July-to-September period from 560 in the same quarter last year.

California-based RealtyTrac suggested the drop in sales of distressed homes was part of a national trend due, in part, to a general drop in home sales activity during the third quarter after the expiration of a federal tax credit. RealtyTrac said sales rose in only three states for which it had data. Sales declined in 36 states. RealtyTrac didn't have sufficient data for 11 states.

Another factor likely was improper foreclosure processing by some lenders that led them to halt sales in many states, including Hawaii, late in the quarter.

The decline in foreclosure sales occurred despite a 48 percent rise in the number of foreclosure actions against Hawaii properties in the third quarter.

The drop in sales followed an 81 percent increase in second-quarter foreclosure sales to 526 from 290 in last year's second quarter.

RealtyTrac's report covers two kinds of foreclosure sales -- sales by lenders after they repossess homes, and short sales in which homeowners facing foreclosure get lender approval to sell their homes, often for less than the outstanding mortgage.

The average price for all third-quarter Hawaii home foreclosure sales was $353,540. RealtyTrac said that was 26 percent less than the average for all nonforeclosure home sales in the quarter.

However, it's hard to measure the true "discount" on foreclosure sales because average prices are influenced by numerous factors including the age, size, location and quality of homes sold.

Foreclosure sales represented 12.3 percent of home sales statewide. That compared with 10.3 percent in the second quarter.

Among other states in the third quarter, the highest rate of foreclosure sales among all home sales was in Nevada, where 54 percent of home sales were foreclosures. Eight other states had foreclosures representing 25 percent of home sales.

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