More than 23,200 foreclosures in 2006 sat unsold until the second quarter of 2010 â€“ more than four years later, according to a study from the data analytics firmÂ CoreLogic.
Analysts studied the destinations of more 355,000 properties that hit foreclosure auctions in 2006. Investors bought about one-third of them at the courthouse steps, and the remaining 233,000 went back onto lenders' books as real estate owned.
Of those, 90%, or 210,000 homes, sold as REO to third-party buyers. Of these, half took six months to sell and 21% took more than one year to unload.
But 23,200 sat unsold for four years, CoreLogic found. These are properties that entered the foreclosure process before the system surpassed its maximum capacity in many states. REO sales have yet to peak, meaning the time banks and the U.S. government will have to hold these homes could go even longer.
What is known is that the longer the property sits, the more cash buyers end up with the property, often for steep discounts. For the 2006 REO that resold more the one year later, 55% went to cash investors, compared to 40% for the entire foreclosure stock that year.
More than 11,000 of the REO sales were resold three times over the next five years, and 70% were resold through cash transactions. CoreLogic said the dominance of cash for these so-called "churned" properties is consistent in later auctions.
For the 2006 REO sold to buyers who took out a mortgage, only 2% fell back into REO in the five years since.
Such stagnant pools of inventory have crippled any recovery in home prices. Most analystsÂ predictÂ even more depreciation in 2012. Billions in government initiatives such as the Neighborhood Stabilization Program and the Hardest Hit Fund went to help states and nonprofits resell vacant and abandoned foreclosures even as Republicans in the HouseÂ movedÂ to cut these programs.
But until the overall economy and employment improves, the inventory overhang will only widen.