supply of properties available at foreclosure auction. That number increased to a new pandemic high in the second quarter, although it was still 52% below the pre-pandemic level in second quarter 2019. But rising supply doesn’t explain the pullback in competition for REO auctions. The REO supply number decreased 12% between the first and second quarters of 2022. SHRINKING BUY BOX More likely the decrease in competition is the result of real estate investors shrinking their buy box to properties that represent a safer investment, based on factors such as location, price point, and surrounding market conditions. “We’re transitioning from a super red-hot market and it’s cooling off a bit, mostly interest-rate driven,” said Paul Lizell, a real estate investor and coach who’s been investing since 2001. “We’re telling (our real estate investing students) to back off of some of the higher end properties and stay under $350,000. That’s a safer range.”
EASING COMPETITION Competition at both foreclosure auctions and bank- owned (REO) auctions hit an all-time high in first-quarter 2022 as measured by bids per property for REO auctions and online saves per property for foreclosure auctions, according to the Auction.com data. In both cases, competition pulled back from that all-time high in the second quarter. Competition was still well above pre-pandemic levels in the second quarter, partially a function of the low supply of foreclosure and REO auctions. Properties brought to foreclosure auction during the quarter attracted an average of 24 online saves—four times the average saves per property in the first quarter of 2019. Properties brought to REO auction received an average of 11 bids, up from an average of nine bids per property in the second quarter of 2019. The quarterly decrease in competition at foreclosure auction could in part be due to a gradually increasing
Demand Falling Faster for Higher-End Distress
Under $100K
$100K to $300K
Over $300K
43
42
41
36
33
30
27
26
26
22
22
22
20
18
18
18
17
16
JAN
FEB
MAR
APR
MAY
JUN
Online Saves Per Property Brought to Foreclosure Auction
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