Industry Update
October 28, 2024
Source: Mortgage Bankers Association
Auction.com released its Auction Market Dispatch for the third quarter, finding that demand continues to weaken.
All the key auction demand metrics fell at the national level in Q3 from Q2–both for foreclosure auctions and for bank-owned (REO) auctions.
For one, the average number of bidders per property sold at REO auction was down 10% from Q2 and down 8% year-over-year. The metric ended at a 23-month low in September.
However, demand at REO auction is still above pre-pandemic levels, with the average number of bidders still 24% above the 2019 average.
For foreclosure auctions, the sales rate was down 3% from Q2 and down 2% year-over-year, with a nine-month low hit in September. But, it’s still 39% above the 2019 figures.
Many markets are bucking the trend however, with demand increasing somewhat in the Midwest and Northeast and decreasing in the Southeast and West.
Price demand fell in Q3 as well.
Winning bidders at REO auctions in the quarter were willing to pay 54.4% of estimated after-repair value, down nearly five percentage points from a two-year high of 59.3% in Q2, and down from Q3 2023’s 57.3%.
The winning bid-to-value ratio at REO auction was five points below the 2019 average of 59.7%.
For foreclosure auctions, winning bidders were willing to pay 56.6% of after-repair value on average, down from a two-year high of 59.7% in the previous quarter and down from 58.7% in Q3 2023.
The Q3 price-to-value ratio at foreclosure auction was below the 2019 average of 60.3%.
Constrained supply is also affecting the market. The number of properties brought to foreclosure auction was at 44% of the pre-pandemic level of Q1 2020. The number was also down 46% from Q2, and down 53% from Q3 2023.
REO properties brought to auction was at 37% of the pre-pandemic level, up slightly from the two-year low of 36% notched in Q2, and down 40% year-over-year.
The bid-ask spread widened in Q3 2024, for foreclosure auctions and REO auctions.
The REO auction bid-ask spread hit 14 percentage points in the quarter, up from 10 points in Q2 and 12 points in Q3 2023. That’s the biggest spread for the metric since Q4 2022.
The foreclosure auction bid-ask spread grew to 6 percentage points, up from 4 points in Q2 and 3 points in Q3 2023.
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