Foreclosures keep falling to new lows
March 1, 2017
Those in the real estate market know full well that the number of homes in some stage of the foreclosure process has been falling for some time now, with very few upticks registering at all in the past several years. With this in mind, it seems that the inventory of homes nationwide currently or moving into that process could keep falling for at least a little while longer, and the latest data from a number of sources shows why.
"The number of foreclosure filings was the lowest level observed since 2006."
For instance, the number of foreclosure filings seen at the end of 2016 came to only slightly more than 933,000, a decline of 14 percent on a year-over-year basis and the lowest level observed since 2006, before the housing crisis took hold, according to the latest U.S. Foreclosure Market Report from ATTOM Data Solutions [previous passage a bit wordy]. A decade earlier, there were only about 717,500 foreclosures seen in some stage of the process - whether it was default notices, scheduled auctions, or lender repossessions.
That 2016 year-end number of less than 1 million accounted for just 0.7 percent of all housing units in the U.S., which was likewise the lowest rate seen since 2006's level of 0.58 percent, the report said. Further, nearly 86,000 properties were in foreclosure during the month of December, a decline of 1 percent from November's figure, and 17 percent from a year prior. That marked the 15th straight month with an annual decline in activity.
Likewise, CoreLogic's latest data - which encompasses U.S. figures through the end of November - likewise showed that the number of homes in the foreclosure inventory is falling as well, according to the latest National Foreclosure Report. On an annual basis, the number of foreclosed homes for sale across the U.S. was down 25.9 percent in the penultimate month of 2016, and the number of newly completed foreclosures fell by 35,000 year-over-year.
"Fewer consumers are falling behind on their payments these days."
Why is that happening?
These changes come due to the fact that fewer consumers are falling behind on their payments these days as the economy improves, thinning out the number of newly foreclosed homes hitting the market, CoreLogic reported. Meanwhile, because foreclosed homes tend to be discounted at least somewhat in comparison with similar properties, bargain-hunting buyers are trying to scoop them up quickly as home prices and mortgage rates continue to rise.
"The 7 percent appreciation in home prices through November 2016 has added an average of $12,500 in home-equity wealth per homeowner across the U.S. during the last year," said Anand Nallathambi, president and CEO of CoreLogic. "Sustained growth in home prices is clearly bolstering homeowners' spending power and balance sheets and, as a result, spurring a continued drop in defaults."
It's also worth noting that the strict lending requirements seen in the past few years - as financial institutions look to weed out riskier borrowers - are seen by many in the industry as likewise playing a significant role in keeping delinquency and default rates near all-time lows.
If you liked this article, consider signing up for our weekly Buzz recap email! Sent every Friday morning, it's a quick way to catch up on all the industry news and happenings at Avantus. Click here to sign up!