into a continuation of gradually rising foreclosure auction volume in 2023. Early evidence of that likely 2023 increase shows up in 2022 foreclosure start data from ATTOM Data solutions. Nationwide, more than 67,000 properties started the foreclosure process in third- quarter 2022, up 167% from the moratorium-suppressed levels of third-quarter 2022. That marked the third consecutive quarter with a triple-digit year-over-year increase in foreclosure starts, coinciding with the expiration of the foreclosure moratorium in late 2022. OPPORTUNITY AND RISK A combination of rising foreclosure inventory and more favorable foreclosure pricing could translate into prime buying opportunities for real estate investors in 2023. But that opportunity comes with a flip side of risk, given that investors will be reselling and renting back into
Proprietary data from Auction. com shows distressed property sellers have begun to adjust pricing lower, albeit at a much slower pace than many buyers. The credit bid, also known as reserve, was 73% of estimated “as-is” property value on average for properties brought to foreclosure auction in the third quarter of 2022, down from 74% in the third quarter of 2021. Although sellers lowered pricing by just one percentage point over the last year, buyers purchasing on the Auction.com platform lowered their pricing by nearly 10 percentage points during the same period. INCREASING INVENTORY Meanwhile, the inventory of properties available at foreclosure auction plateaued in the third quarter after increasing to a new pandemic high in the second quarter, according to Auction.com data. In both quarters, foreclosure auction volume
was at 50% of the pre-pandemic level in third-quarter 2019. But a backlog of pandemic‑deferred distress, along with a slowing housing market, will likely translate
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