Distressed Property Market Continues to See Weakened Demand

Distressed property sales continue to mirror the rest of the housing market. According to a recent survey from online auction marketplace Auction.com, current market conditions have had an impact on distressed property sales over the last several quarters, with demand for foreclosure and bank-owned properties declining through Q4 2024. In late 2024, the number of properties available for foreclosure auction fell to its lowest point in three years, despite a slight rebound in scheduled auctions. However, demand began to recover in December, particularly after the election. Despite this improvement, challenging market conditions are discouraging many buyers. In fact, 35% of buyers say they feel less willing to purchase due to market conditions, compared with 24% who feel more willing.

Price demand — the amount buyers at auction are willing to pay relative to estimated after-repair value — increased throughout the fourth quarter to end the year at a six-month high for both foreclosure auctions and REO auctions.

“The shortage of foreclosures going to auction is making us more likely to buy properties with tighter margins,” wrote one survey respondent who said he plans to buy more distressed properties at auction in Q1 2025 than he did in Q4 2024. Read more