Here’s a bit of encouraging news for the real estate market: Foreclosure rates are further shrinking, according to the latest report from CoreLogic, a real estate data source.
In fact, foreclosure inventory (homes in some current stage of foreclosure) and completed foreclosures are down, respectively, 33 and 39 percent nationally from a year earlier (September 2012 to September 2013), per the report. As of September 2013, the foreclosure inventory comprised 2.3 percent of all homes with a mortgage versus 3.2 percent measured a year prior.
These numbers represent positive signs that the housing market continues to improve, although they stand to benefit sellers more than buyers, experts say.
“As foreclosures decline, prices will begin to increase. A home will be more expensive because there will be less inventory, especially inexpensive inventory,” says John Graham, owner/broker of John Graham Realty Inc., Shelby Township, Mich.
Scott Shellady, senior vice president of derivatives for Trean Group, a futures and commodities brokerage in Chicago, says the CoreLogic data is yet another indicator that the housing market is bouncing back. “[It’s] the beginning of a long healing process, but the [home] prices are at nowhere near the prices they were seven years ago,” Shellady says. “Just because the foreclosure rate is declining doesn’t mean our houses are worth more — it simply shows that less people cannot afford their homes.”
There could be an other reason for low foreclosure levels: “It may simply be that staff that was focused on the backlog of foreclosures has been redeployed, and they are now less efficient at processing the files,” says Cameron Findlay, chief economist for Discover Home Loans in Riverwoods, Ill.
Buyers and sellers should look at more than just the foreclosure rate to get a feel for their local housing market.
“Prospective buyers and sellers need a more comprehensive, detailed analysis to infer much about the specific region they work or live in,” Findlay says. “Given the recent home appreciation in most markets, this reduces the negative equity impact, which has allowed for more potential foreclosure candidates to work out their mortgages.” — Erik J. Martin
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