Foreclosure Normalization: An End that Never Comes

Foreclosure statistics continue to fall, month after monthrnbut seemingly never reach bottom or even normal levels.  Anyone care to revisit Zeno’s Third Paradox?</p

Snark aside, it is good news that July was another month thatrnsaw an ebbing role for foreclosures in housing. rnCoreLogic’s National ForeclosurernReport shows the month with significant declines in both completedrnforeclosures and legal actions in process compared to a year earlier and whatrnare becoming typical month-over-month declines.</p

Completed foreclosures numbered 38,000 in July compared torn50,000 a year earlier, an annual decrease of 24.4 percent.  It was a 6.2 percent drop from June 2015 whenrn40,000 homes were lost to foreclosure. rnCoreLogic said in a typical month prior to the housing crash anrnestimated 21,000 foreclosures were completed but at the peak in September 2010rnthere were 117,225.</p

The five states with the highest numberrnof completed foreclosures for the 12 months ending in July 2015 were: Florida (98,000),rnMichigan (47,000), Texas (33,000), California (27,000) and Georgia (27,000).rnThese five states accounted for almost half of all completed foreclosuresrnnationally.</p

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The national foreclosure inventoryrndeclined by 27.9 percent.  There are nowrnapproximately 469,000 homes in the legal process of foreclosure compared torn650,000 homes in July 2014.  Therninventory rate, homes in foreclosure as a percent of all mortgaged homes,rndeclined from 1.7 percent to 1.2 percent from July 2014 to July 2015.  </p

Four states and the District ofrnColumbia had the highest foreclosure inventory as a percentage of all mortgagedrnhomes: New Jersey (4.8 percent), New York (3.7 percent), Florida (2.7 percent),rnHawaii (2.5 percent) and the District of Columbia (2.4 percent).  The District also ranked as the area with thernlowest foreclosure rate in the nation. rnThe two statistics are likely not unrelated. </p

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The numbers of foreclosed and inrnforeclosure homes are likely to continue to decrease based on delinquency ratesrnwhich also continue to shrink.  CoreLogicrnsaid mortgages in serious delinquency, 90 or more days past due or in foreclosure,rndeclined by 23 percent year-over-year to 1.3 million or 3.4 percent ofrnmortgaged homes.  This is the lowestrndelinquency rate since December 2007.  </p

“Job market gains and home-pricernappreciation help to push serious delinquency and foreclosure rates lower. ThernCoreLogic national HPI^TM showed home prices in July rose 6.9 percent from a yearrnearlier, building equity for homeowners,” said Frank Nothaft, chiefrneconomist for CoreLogic. “Further, 2.4 million jobs were created, pushingrnthe unemployment rate down from 6.2 percent in July 2014 to 5.3 percent thisrnJuly and supporting family income growth for most owners.”</p

“As we enter the final months ofrn2015, the housing market continues to gather steam buoyed by improving economicrnconditions and the release of pent up demand for homeownership,” saidrnAnand Nallathambi, president and CEO of CoreLogic. “The recovery in thernhousing market is also reflected in declining delinquency and foreclosure ratesrnwhich, to some degree, reflects the progressive clearing of crisis-era loansrnand the benefits of tighter underwriting standards over the past sixrnyears.”

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