With elevated housing costs over the past few years, prospective homebuyers have faced a number of obstacles in trying to purchase a home. This has also been the case for those looking to buy distressed properties. According to a recent survey from online auction marketplace Auction.com, demand for distressed properties sold at auction continued to weaken through Q3 2024. Among surveyed buyers, 34% felt less inclined to buy due to market conditions, while only 21% were more willing to buy. The rest—45%—said market conditions didn’t affect their buying decisions. Of the reasons listed for not wanting to buy property, 55% said they were concerned with higher acquisition costs, 49% mentioned rising rehabilitation costs, and 30% noted unfavorable mortgage rates.
Weakening demand from the local community developers buying at auction suggests continued weakness in the retail housing market into early 2025 given that those local community developers are anticipating retail market conditions about six months into the future — the typical time it takes to renovate distressed properties purchased at auction and return them to the retail market as resales or rentals.