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Distressed home sales marketplace Auction.com released a new report Monday highlighting a drastic drop in foreclosure auction property volume in the fourth quarter of 2024. But auction buyers are still willing to enter the market as the new presidential administration settles into office.
Auction.com’s Auction Market Dispatch report is released on a quarterly basis. Its data is based on the company’s proprietary inventory, bidding, pricing and survey data. The report showed that the inventory of properties available for sale at auction dropped to a three-year low in Q4 2024. This occurred in spite of scheduled foreclosures rebounding from a two-year low in Q3 2024.
Buyer demand for inventory at both foreclosure and bank-owned (REO) auctions also fell in the fourth quarter. But buyers expressed more optimism after the conclusion of the 2024 election. According to Auction.com, 43% of surveyed buyers said the election results made them want to purchase properties at auction. Only 3% said the election decreased their willingness to buy, while the remaining 54% were unchanged in their intentions.
The Q4 2024 results follow a trend of declining auction demand in the prior quarter.
One respondent wrote that “election results should create a better market going forward.“ Another who indicated more willingness to buy after the election said that “the price of everything has increased, including foreclosures. However, as long as profit margins stay the same it doesn’t affect me much.“
Despite that, the sales rate at foreclosure auctions declined by 3% between the third and fourth quarters even as it remained 2% higher than a year ago. But from November to December, the rate spiked by 7% to a five-month peak while sitting 5% higher than December 2023.
Auction.com reported that REO auction demand followed an identical pattern. REO auction buyers also spent more, with the share of quality bids (within 30% of the seller’s reserve price) rising by 2% in December.
For both auction types, price demand — the amount that buyers paid relative to the estimated after-repair value — increased in November and December. Buyers attributed this increase to the foreclosure inventory shortage.
“The shortage of foreclosures going to auction is making us more likely to buy properties with tighter margins.” one respondent wrote.
At a local level, 54% of markets analyzed in the report posted annualized declines in the fourth quarter in the average bid-to-value ratio of foreclosure auction properties. These markets include Chicago, Dallas, Detroit, Philadelphia and Houston. Conversely, markets that saw increases in the bid-to-value ratio included New York City; Cleveland; Baltimore; Washington, D.C.; and Phoenix.
Five cities stood out for growth in their foreclosure auction sales rates. Cleveland had the highest increase, up 29% year over year. It was followed by Philadelphia (+19%), Houston (+14%), New York (+12%) and Chicago (+9%). Sales rates dropped on a yearly basis in Dallas, Detroit, Atlanta, Minneapolis and San Antonio.
