Earlier this month, CoreLogic, the analytical and business services data firm, released the company’s first annual Foreclosure Report. In 2011, there were 830,000 home foreclosures taken through the entire process. A dropped from 1.1 million foreclosure properties in 2010.
From November to December 2011, the number of foreclosures declined from 57,000 to 55,000. In addition, the number of foreclosed properties completed in the month of December fell to base on year-to-year. In 2010, there were 67,000 home foreclosures for the same month.
CoreLogic states there have been 3.4 million foreclosures on American homes since 2008. The overall foreclosure inventory at the end of 2011 was 1.4 million foreclosed properties. These foreclosure listings include VA foreclosures, REO properties and other foreclosure properties.
Shadow Inventory of Foreclosed Homes
Housing analysts estimate the US has a shadow inventory of 2.1 million foreclosed homes. The shadow inventory consists of a backlog of home foreclosures and loans, which have mortgage payments delinquent for as long as 24 months. At the end of January 2012, the Mortgage Processing Service– the nation’s largest mortgage servicer, reported a delinquency rate of 7.97% on home mortgages.
This figure represents the number of loans mortgage servicers report as 30 days or more past due but have to reach the home foreclosures pipeline. The total number of foreclosed properties and shadow inventory is somewhere between 3.5 million and 4 million units.
Foreclosed Properties Depresses Home Values
In a recent paper, MIT and Harvard researchers concluded that foreclosure properties reduced home prices an average of 27%. They found that all homes situated within 250 feet of foreclosed properties lost an average value of one percent.
The Mortgage Bankers Association (MBA) and National Association of Realtors (NAR) applaud the Obama’s administration plan to get rid of the massive number of government foreclosures by selling them to foreclosure investors. Investors will be required to hold the homes as rentals for a pre-determined period, before they can sell the properties.
The NAR and MBA that the Obama administration and Federal Housing Finance Agency—the agency that provides oversight for Fannie Mae and Freddie Mac, gradually release government foreclosures in states that already have a high number of foreclosure homes. This would include states like Florida –11.9%, New Jersey – 6.4 %, Illinois – 5.4, Nevada – 5.3% and New York – 4.6 %.
Investors and home buyers who purchase foreclosure homes can use this information, and other data, such as home sales or the Case-Shiller Home Price Index, to gauge trends. It also assists in measuring strengths or weaknesses in local housing markets and areas with significant inventories and high rates of home foreclosures.