Concentration of Foreclosure Inventory is a Concern - CoreLogic
While completed foreclosures increased slightly from May to June, the foreclosure inventory, a count of homes in the process of foreclosure, continued to slide. CoreLogic's National Foreclosure Report for June puts the number of homes lost to foreclosure during the month at 49,000 units. While this was an increase of 2.7 percent compared to May's 48,000 completed foreclosures, it was down 9.9 percent from the 54,000 foreclosures in June 2013.
Even at the declining rate, completed foreclosures are still running at better than twice what is historically considered normal. CoreLogic points out as a basis of comparison that in the six years before the 2007 decline in the housing market, completed foreclosures averaged 21,000 per month. Since the foreclosure crisis began in earnest in September 2008 there have been approximately 5.1 million foreclosures completed.
The foreclosure inventory stood at 648,000 homes at the end of June compared to 1 million a year earlier, a year-over-year drop of 35 percent and down 3.9 percent from May. It was the 32nd month of consecutive annual declines and the 17th month in which those declines have been in excess of 20 percent. The foreclosure inventory rate, the percentage of all mortgaged homes in foreclosure, has dropped from 2.5 percent in June 2013 to 1.7 percent.
"While 32 straight months of year-over-year decline in the foreclosure rate is cause for celebration, the total number of homes still in the foreclosure process remains almost four times as high as the average in the early 2000s," said Mark Fleming, chief economist for CoreLogic. "Additionally, there is concern over whether or not we can maintain this pace of improvement as the foreclosure inventory becomes more concentrated in judicial states with lengthier, more complex processes and timelines."
All but one state had double digits drops in completed foreclosures year-over-year. Wyoming saw a 5.1 increase in its completed foreclosures but this still resulted in only 767 actions. Five states, Florida, Michigan, Texas, California, and Georgia together accounted for nearly half of all completed foreclosures in the nation in June.
Thirty-six states had annual declines in their foreclosure inventory greater than 30 percent and Arizona and Utah's inventories dropped more than 50 percent. The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: New Jersey (5.7 percent), Florida (5.0 percent), New York (4.3 percent), Hawaii (3.1 percent) and Maine (2.7 percent). All are judicial process states.
"The national inventory of foreclosed homes fell for the 32nd straight month to just under 650,000 in June. Most of the U.S. has reduced its shadow inventory to pre-recession levels, but the Northeast, Florida and the Pacific Northwest remain elevated," said Anand Nallathambi, president and CEO of CoreLogic. "The great news here is that the basic underpinnings of the housing market are strengthening, but there is still work to do."