Auction.com: Foreclosure Auction Volume Falls in Q4

(Image courtesy of Auction.com; Breakout image courtesy of Thirdman/pexels.com)

Auction.com, Irvine, Calif., reported that the supply of properties available to buy at foreclosure hit a three-year low in Q4 2024.

The number of properties brought to foreclosure auction in Q4 was at 42% of the pre-pandemic level, down from 43% in Q3 and 47% in Q4 2023. However, scheduled foreclosure auctions rebounded slightly, indicating that activity may pick up in Q1 2025.

Demand fell in the fourth quarter overall, but started to perk up in December.

The sales rate at foreclosure auction, or the share of properties available at auction that sold to third-party buyers, fell 3% from Q3 but was up 2% year-over-year. However, the foreclosure auction sales rate saw a 7% bump between November and December.

But despite the increased activity, 35% of buyers surveyed in early January said market conditions are making them less willing to buy.

Foreclosure auction demand increased year-over-year in 59% of major metro areas analyzed in the quarter.

Price demand at auction–the average price buyers are willing to pay as a percentage of estimated after-repair value of the properties–also grew in the second half of Q4.

Specifically, price demand at REO auction rebounded in Q4 from a two-year low in the previous quarter. The average winning bid-to-value rate at REO auction was 56.2% in Q4, up from 54.4% in Q3 and 55.5% in Q4 2023.

For foreclosure auctions, the average winning bid-to-value ratio fell slightly to 55.8% from 56.7% in Q3 and Q4 2023.

The bid-ask spread between what bidders were willing to pay and sellers were willing to take narrowed, largely due to buyers being willing to pay more. The spread was at 12 points in Q4 after a two-year high of 14 points in Q3.