A bank-owned home was for sale last week in Las Vegas. In states hardest-hit by the housing bust, foreclosed homes represent a growing share of homes sold, and that number has risen above 50 percent lately in particularly hard-hit cities.

Thomas Blanchard, a broker and owner of REO Asset Services, which sells bank-owned properties, talks to an employee in his office last week in Las Vegas. Blanchard estimates that 60 percent of properties on the market there are the result of foreclosures.

Washington ? A growing share of home sales are from foreclosures, especially in states hardest hit by the housing bust. In some parts of California lately, nearly 50 percent of home sales come from foreclosed houses.

The trend, which is putting downward pressure on home prices, is most notable there and in Nevada, Colorado, Tennessee and Michigan, but is also evident in Ohio, Georgia, Florida and Arizona, according to an Associated Press comparison of 2007 sales and foreclosure data. In Nevada, for example, 17.5 percent of home sales were from foreclosures, more than quadruple the number in 2006.

The growing proportion of foreclosure sales is both a symptom and cause of worsening conditions in the weakest housing markets, real estate experts say. Homeowners who aren’t on a deadline to sell are yanking their properties off the market, and this means the remaining inventory is increasingly held by banks eager to unload foreclosed properties at fire-sale prices rather than carry the costs on their books.

Other financial effects

Property values and local tax revenues are suffering as a result, consumer advocates say, especially in neighborhoods with lots of minority residents for whom lending standards were weakest.

“There is a real complacency, or an under-appreciation of how bad this is,” said Ramsey Su, an investor and former real estate broker in San Diego who regularly combs through the local sales database to assess the impact of foreclosure sales.

Reacting to such concerns, the Bush Administration and lenders including Bank of America Corp. and Citigroup Inc. unveiled a plan Tuesday to give seriously delinquent borrowers a 30-day break from foreclosure while lenders try to work out a way to make the mortgage more affordable.

The AP’s foreclosure analysis compared the annual rate of existing home sales in the third quarter of 2007 – the most recent quarter available from the National Association of Realtors – with foreclosure sales data provided by RealtyTrac Inc. of Irvine, Calif. The analysis found:

¢ In Colorado, foreclosure sales accounted for 15.6 percent of home sales in 2007, up from 10 percent in 2006.

¢ In California, the number jumped to 11.3 percent from 3.7 percent.

¢ In Tennessee, it rose to 10.6 percent from 5.2 percent, and in Michigan it climbed to 9.3 percent from 4.9 percent.

¢ Nationwide, including Washington, D.C., foreclosure sales grew to 4.7 percent of existing home sales, up from 3.3 percent in 2006. Comparable data were not available for South Dakota and New Hampshire.

The analysis underscores that the housing bust is having the most severe impact in areas where lending standards were the loosest, or where the economy is especially weak. In 18 states – including places as diverse as Maine, New Mexico and Kansas – foreclosure sales made up less than 2 percent of total sales.

Lax lending standards, which were especially prevalent in formerly booming housing markets in California and Nevada, allowed borrowers to buy far more expensive houses than they could afford during the boom years, and now defaults are surging. Highly discounted foreclosure sales also can make it tougher for borrowers to refinance into more affordable loans if their property value falls, which could lead to more foreclosures and lengthen the housing crisis.

Thomas Blanchard, who sells bank-owned properties in Las Vegas, said the trend has accelerated the past two months, and he estimates that 60 percent of properties on the market there are in foreclosure.

“The only people that you have in our market here in Las Vegas are the people that have to sell,” Blanchard said.

The same is true in parts of California. In December, 46 percent of homes sold in the Sacramento area and 31 percent in the San Diego area had gone through foreclosure, up dramatically from about 4 percent a year earlier, according to San Diego-based DataQuick Information Systems, a real estate information firm.

Banks trimming prices

Banks, faced with the mounting costs of holding properties, are cutting prices. The average price of a foreclosure sale nationwide dropped about $1,000 last year to about $226,000, according to RealtyTrac.

While foreclosure sales are bad news for homeowners in neighborhoods with high foreclosure rates, they are a boon for well-financed buyers looking for properties at bargain prices. And in broad terms, economists view them as part of getting back to more realistic prices after years of excess.

More than half of houses sold in San Diego last month were either bank-owned properties or “short-sales” in which a lender agrees to accept less than the value of the mortgage to avoid a foreclosure, according to Su, the investor. That number was up dramatically from 26 percent in August, according to calculations Su made by combing through the San Diego real estate listings database.

In an effort to get a handle on the scope of the problem, the National Association of Realtors is conducting an informal survey of the issue and is planning to release findings later this month, spokesman Walter Molony said.

Experts emphasize that the available data paints an incomplete picture. That’s because the Realtors group doesn’t count all foreclosure sales because many foreclosures are sold through auctions and are not listed on the regional databases where the trade group gets its data.