The number of properties in foreclosure auctions fell to a three-year low in the fourth quarter, but post-election trends point to the beginnings of a 2025 turnaround, according to new industry data.
While falling, the end-of-year numbers also showed signs of growth across the distressed-property segment, Auction.com said. The number of homes available at foreclosure auctions inched down to 42% of pre-pandemic levels in the fourth quarter, off from 43% three months prior. Auction volumes tumbled further from 47% when compared to early 2020 immediately, just prior to foreclosure moratoriums resulting from the Covid-19 pandemic.
On a forward-looking basis, though, the real estate platform also found scheduled foreclosure auctions, which reflect anticipated future availability, increasing to 52% of pre-pandemic volume by the end of 2024. The trend continued in early 2025, with data showing future auctions rising to a 19-month high at the beginning of January.
A noticeable pre- and post-election shift took place in the fourth quarter, indicating the potential for growth in 2025.
“Election results should create a better market going forward,” a buyer said in a response to an Auction.com survey. The report included results from the platform’s survey conducted in early January and measured sentiment of 145 Auction.com clients.
A 43% share of auction buyers, a pool with a large share of local community developers, expressed a greater willingness to purchase in 2025 due to November’s election results, according to the survey. Only 3% said the result decreased their appetite to buy.
The sales rate in the fourth quarter, measured by the share of properties successfully sold at auction, fell 3% from three months earlier but picked up by 2% year over year. A late 2024 shift, though, showed sales shares accelerating by 7% from November to December to hit their highest mark since summer. They finished 5% higher year over year.
Still, while signs point to returning demand, current market conditions are placing a roadblock for some customers. A 35% share of buyers said they were less willing to buy based on current conditions, compared to the 24% who found the market favorable for purchases.
“The price of everything has increased, including foreclosures,” a survey respondent said.
“[The] real estate market is stagnant,” a different respondent wrote. “With the high interest rates, [my] buyers pool is almost dry.”
Foreclosure auction demand increased annually in 59% of markets measured by Auction.com, including in several large cities like Philadelphia, New York and Chicago, where sales rates rose by 19%, 12% and 9%, respectively.
New foreclosure numbers in December as measured by Intercontinental Exchange also suggest a rise in supply to come. The volume of starts increased by over 50% month to month, while foreclosure pre-sale inventory was also up but at a more muted pace.
While demand increased in late 2024, the bid-to-ask spread also reached a two-year high of seven percentage points, but mostly due to activity early in the quarter, Auction.com said. In another indication of elevated buyer interest later in the year, spreads narrowed from November to December, with the five-point spread the lowest in seven months.
The spread reflects the price a buyer is willing to pay compared to the value acceptable to a seller. The narrowing gap in late 2024 resulted primarily from increased bidding prices on the purchase side rather than reductions on the part of sellers, the research determined.
The average winning bid-to-value ratio in the fourth quarter slid to 55.8%, falling from 56.7% both three months and one year earlier.
Meanwhile, the supply of units available at real-estate owned auctions, which feature previously unsold foreclosed properties put back on the market by banks, finished the fourth quarter at 39% of pre-pandemic levels. The percentage rose from 37% one quarter earlier and a two-year low of 36% earlier last year.
The number of bidders at REO auctions pulled back by 7% and 9% on both a quarterly and annual basis. Similar to the foreclosure market, numbers picked up in the final two months of 2024, when the number jumped 8%.
The average bid-to-value ratio for winning REO-auction offers was 56.2%, rising from 54.4% and 55.5% in the previous quarter and year.
