Home Prices Benefit From Decline in Foreclosures -CoreLogic

CoreLogic reported on Tuesday that all major indicators of housing distress declined by double digits over the last year.  The company's August National Foreclosure Report has most of those measures back to levels of the early days of the housing crisis.

The foreclosure inventory, the number of properties in an active state of foreclosure, is now 351,000.  This is a decrease of 29.6 percent since August 2015.  The inventory represents 0.9 percent of all homes with a mortgage, the lowest rate since July 2007.  A year ago the rate was 1.3 percent.  The August inventory was down 3.2 percent compared with July.

There were 37,000 completed foreclosures nationwide in August compared to 64,000 the previous August, a -42.4 percent change.  CoreLogic said that completed foreclosures peaked at 118,211 in September 2010 so the current number represents a 69 percent drop.  Since the financial crisis first become evident in September 2008 there have been 6.4 million homes lost to foreclosure.

Completed foreclosures did tick up from July by 3,000 to 37,000, a 7.7 percent gain.  As a basis of comparison, in the six years preceding the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month.

Delinquencies also have seen large declines over the last year. CoreLogic reports that the number of mortgages in serious delinquency (defined as 90 days or more past due including loans in foreclosure or REO) declined by 20.6 percent from August 2015 to August 2016, with 1.1 million mortgages, or 2.8 percent in distress, the lowest level since September 2007. The decline was geographically broad with decreases in serious delinquency in 48 states and the District of Columbia.

"Foreclosure inventory fell by 30 percent from the previous year, the largest year-over-year decline since January 2015," said Dr. Frank Nothaft, chief economist for CoreLogic. "The large decline in the distressed inventory has been one of the drivers of steady home price growth which helps Americans increase their home equity to support increased spending or cushion future economic risk."

"Foreclosure rates and serious delinquency continued to trend down in August as real estate markets across many parts of the U.S. exhibit strong demand growth and rising prices," said Anand Nallathambi, president and CEO of CoreLogic. "With the foreclosure inventory now under 1 percent nationally, the need to boost single-family housing stocks through new construction will become more acute in the coming months and years."

Thirty-five percent of all completed foreclosures nationwide in the 12 months ended in August were performed in five states; Florida (55,000), Texas (27,000), Ohio (23,000), California (22,000) and Georgia (21,000).

Four states and the District of Columbia had the highest foreclosure inventory rate in August 2016: New Jersey (3.2 percent), New York (2.9 percent), Maine (1.8 percent), Hawaii (1.8 percent) and the District of Columbia (1.8 percent).