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MortgagePoint ยป Your Trusted Source for Mortgage Banking and Servicing News 78 November 2024 J O U R N A L year. These markets include Pittsburgh, Buffalo, New York, Portland, Tulsa, and Milwaukee. Conversely, 36 out of 65 markets (55%) reported lower sales rates in Q3 2024 than they did a year earlier. These markets include Las Vegas, Austin, Charlotte, Alexandrea, Louisi- ana, and Riverside-San Bernardino in Southern California. While demand tended to decline in the Southeast and West, it generally climbed in the Midwest and Northeast. "I was going to stay out of the mar- ket, but really low prices on properties is keeping me in," said one survey respon- dent, reflecting the minority view that is helping to boost demand in markets with lower-priced distressed inventory. Overall Price Demand Down From Two-Year High Both REO and foreclosure auctions saw a decline in price demand in the third quarter, which measures how much purchasers are ready to pay at auction in relation to the anticipated after-repair value. However, some in- tra-quarter tendencies suggest that this trend may reverse in Q4. The average amount that winning bidders at the REO auction in Q3 2024 were willing to pay was 54.4% of the anticipated after-repair value. This was a decrease of almost five percentage points from the previous quarter's two-year high of 59.3% and 57.3% in Q3 2023. Additional- ly, the REO auction's winning bid-to-value ratio in Q3 2024 was five points lower than the average of 59.7% for 2019. Price Demand Bottoms Out in Q3 In Q3 of 2024, successful bidders were willing to pay an average of 56.6% of after-repair value, which was lower than the two-year high of 59.7% in the previous quarter and lower than 58.7% in Q3 of 2023. This was a similar price-demand story in the context of foreclosure auctions. Additionally, the foreclosure auction's Q3 2024 price-to- value ratio fell short of the 2019 average of 60.3%. After falling to an 18-month low of 56.1% in August, the average price-to-value ratio at foreclosure auc- tion rose to 56.8% in September, while the average price-to-value ratio at REO auction increased slightly to 54.7% in both August and September after reach- ing an eight-month low of 53.7% in July. "(The) market has softened but I do see a change coming in the New Year," wrote one survey respondent who said he has been bidding lower relative to after-repair value in the last 90 days due to market conditions. With 28 of the 65 metro regions exam- ined (43 percent) reporting year-over-year increases in the average winning bid-to- value ratio in the third quarter of 2024, price demand trends differed by market. Davenport, Iowa; Baton Rouge; New Haven; Milwaukee; and Columbia were the top markets in those areas. The average winning bid-to-value ratio decreased in 57 percent of mar- kets, with San Francisco, Akron, Ohio, Pittsburgh, Portland, Oregon, and Tampa leading the way. One survey participant responded, "Not much inventory, higher prices," stating that, despite her intention to expand her auction acquisitions over the next three months, she is responding to market conditions by bidding lower than the after-repair value. Constrained Supply Weakens Auction Demand Despite ongoing supply constraints, distressed property auction demand declined in Q3 2024. This was the lowest number of prop- erties brought to foreclosure auction since Q3 2021, when the nationwide foreclosure moratorium on govern- ment-insured mortgages caused by the pandemic was still in place. In the third quarter of 2020, the number of proper- ties brought to foreclosure auction was 44% of the pre-pandemic level, down from 46% in the previous quarter and 53% in Q3 2023. The number of properties brought to REO auction in the third quarter was 37% of the pre-pandemic level in the first quarter of 2020, which was slightly higher than the two-year low of 36% in the previous quarter but still lower than 40% a year earlier. The supply of REO auctions followed a similar pattern, albeit at a lower level. "Not much changed, just trying to get more inventory," wrote another survey respondent who said the market has not impacted his willingness to buy at auction. "I was going to stay out of the market, but really low prices on properties is keeping me in."