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Foreclosure numbers continue to fall on annual basis

June 13, 2017

For nearly two years now, the national level of foreclosure activity has fallen at least somewhat from the previous year, but the most recent data suggests that the current level of activity is a bit more of a mixed bag. To that end, it's important to keep in mind the crucial part foreclosures have played in the market, and how they continue to impact it years after the housing crisis.

"May foreclosure filings were down 19% from last year."

In the month of May, nearly 81,500 homes were hit with some sort of foreclosure filing, down 19 percent from the same month in 2016 and marking the 20th straight month in which there was a decline in activity on a year-over-year basis, according to the latest housing statistics from ATTOM Data Solutions. That meant that only 1 in more than 1,600 homes nationwide were served with such a filing. On the other hand, the number of foreclosure filings were up 5 percent from April.

In all, fewer than 36,000 homes entered the foreclosure process in May, up 5 percent from April but down 15 percent annually, the data showed. Slightly more than 27,000 properties in foreclosure were repossessed by the bank during the month.

The impact on housing
It used to be that when people were shopping for a previously owned home, foreclosures were often quite helpful in this regard, according to CBS News. Not only were there a lot more foreclosed homes available - often at a steeply discounted price - the prevalence they held depressed all home prices in areas heavily affected by the economic downturn. That's what made the few years following the recession a buyer's market, but now that years of recovery have taken place, the shoe is on the other foot, and sellers are the ones realizing significant advantages.

However, the lack of foreclosures now creates a different kind of problem for buyers because that was usually what fueled the inventory in many markets, the report said. But now with relatively few foreclosures in many parts of the country and current owners not selling, competition is increasingly fierce. 

"Competition for a small number of houses is increasingly fierce."

When will the inventory improve?
The problem with the national inventory numbers - all of which suggest major shortages of homes for sale - is that all real estate is regional, according to Knowledge@Wharton. As a consequence, some markets are far more likely to return to historically normal levels of buying and selling activity in the next few years than others. In fact, experts believe some regions could take nearly a decade to fully recover to pre-recession norms.

In the meantime, it's important for would-be buyers to note that while prices and competition may not be ideal, current mortgage rates are still well below all-time or even pre-recession averages. As such, the sooner they can get into the market, the more likely they will be to lock in a rate that helps them save money over the lives of their loans.




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