- The distressed share of all home sales in Region 4 (North Carolina, South Carolina, Kentucky, and Tennessee) has fallen steadily over the 3 quarters ending in September.
- The distressed share was just 21% in the 3rd quarter, down from 33% six months earlier.
- This decline has helped to firm up the prices of distressed properties and expectations for future price growth.
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The share of total sales made up by short-sales and foreclosures continued to decline in Region 2 (New York, New Jersey, and Pennsylvania) over the three-quarter period ending in September. However, the price discount on both types of distressed properties rose in the 3rd quarter suggesting that the slim reserve of distressed sales are less desirable (e.g. commute, neighborhood, etc.) or are in poorer condition than the majority of properties.
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- The share of buyers making a downpayment of 20% or more accounted for one third of all transactions in Region 1 (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut) during the 3rd quarter.
- Downpayment requirements have been elevated for some time, but the new, lower conforming loan limits resulted in higher downpayment requirements in many parts of the high priced Northeast.
- While the limits changed on October 1st, banks and mortgage brokers were putting the new requirements in place in advance of the statutory change anticipating long pipelines of mortgages waiting for closings.
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The share of distressed sales eased for the 3rd consecutive quarter in Region 3 (Delaware, Maryland, District of Columbia, Virginia, and West Virginia). As a result, the price discount on these properties relative to non-distressed sales improved. Demand for distressed sales by investors remains intense in this area as rent growth has been strong and is forecast to remain so.
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- Roughly 45% of homebuyers put down 10% or less for a home purchased during the 3rd quarter in Region 5 (Georgia, Florida, Alabama, Mississippi, Virgin Islands, and Puerto Rico).
- Both the reduction of the conforming loan limits as well as the proposed Qualified Residential Mortgage rule could have a stifling effect on home sales in parts of this market as both measures increase downpayment requirements.
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