Thus, a falling percentage of distressed sales mean a lower percentage of discounted transactions.
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These would, in many cases, be distressed sales, which put downward pressure on prices given their decreased value.
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Home prices have firmed and even increased as distressed sales and opportunistic buying made up less of overall transactions.
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That means that excluding distressed sales, conventional sales were up 29% year-over-year, which is a major continued improvement for the market.
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Some market-watchers expect distressed sales to cause the market to soften again.
Even with home values down--80% of the market is distressed sales, says Dan DeNuccio, a real estate broker with Prudential Americana Group in Las Vegas.
There, distressed sales have kept home values down and buyers away.
The number of distressed sales also affects the size of the foreclosure discount, which in May was reported to be about 20%, according to Goldman.
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In Miami distressed sales as a percentage of all sales went down to 31% from 44% at the start of the year, well off the high point of over 50% seen in mid-2009.
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Still, the rate of distressed sales is falling.
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Orlando experienced a similar trend with current distressed sales representing 25% of total sales, a substantial improvement over the rate of 49% at the start of the year, and below the high of over 54% seen in mid-2009.
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In our view, returning to a more normal proportion of distressed sales will take several years, given the large number of borrowers with negative equity, the large current delinquency and foreclosure inventory, and the long current foreclosure timelines.
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Unlike an obvious wave of bank repossessions, these other distressed sales are not as easy to observe or quantify resulting in what appears to be a relatively calm housing market that belies the still-significant distress below the surface.
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Regulation (such as the robo-signing sparked foreclosure moratorium) has helped to slow distressed sales, while vast number of underwater mortgages and size of the shadow inventory suggests housing markets can face a sudden increase in the number of distressed properties.
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The rate of distressed sales (of foreclosed properties or short-sales) is declining, which in turn means the number of cheaper homes being sold off, as a proportion of the total number of sales, is falling, giving a boost to average prices.
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Home prices have risen for a second consecutive month for the first time since the summer of 2010, but much of this is a consequence of the falling percentage of distressed sales, while prices are still more than 31% of their peaks and may take years to recover.
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So, yes, in 2011 when RealtyTrac spoke it was fair and very much on target to suggest that large numbers of foreclosures would continue to dog the market for years to come, that home values were significantly impacted by distressed sales, and that in many cases distressed sales would take forms other than foreclosure.
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But the recent IPOs have begun to open up the market to institutions, as has the growing number of distressed asset sales by U.K. banks.
In Orlando, the lower priced segment experienced a whopping 19.8% increase in prices in 2011, while on a price per square foot basis their distressed only sales increased by 4.4%.
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In the third quarter, roughly 40% of all home sales were distressed, according to RealtyTrac, an Irvine, Calif.
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That foreign banks will swamp Asia and buy up all distressed banks in fire sales was all a false alarm.
Pre-foreclosure short sales were up 22% from a year earlier and short sales of distressed properties for which foreclosure filings had not yet commenced were up 17% over the same time.
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Nor are we just necessarily talking about corporate fire sales under generally distressed circumstances.
"Distressed" properties and short sales make up about 70% of sales, and the farther inland you go away from Miami, the cheaper they are.
Tighter inventory, especially of distressed homes, held back sales.
Mr. Cecchi also expects more distressed assets, including bank loan sales, to hit the market in 2013.
As an increased number of investors troll for distressed property, foreclosures and short sales make up a shrinking number of sales: they were 21% of existing home sales in March, down from 29% from a year ago.
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Distressed inventory, comprised of short sales and foreclosures that tend to produce an average discount of 14% to 20%, puts downward pressure on non-distressed homes as traditional sellers are forced to slash prices to compete for buyers and appraisers lower values due to a glut of discounted comparables.
Along with the upward movement in price for the distressed market, the overall saturation of REO sales decreased in both Miami and Orlando.
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Clear Capital stresses that distressed activity is the main culprit, as sales of bank-owned ( REO) properties now constitute 40.8% of all for sale homes in the region.
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