Foreclosures Inventory Down More Than 37 Percent

Black Knight Financial Services reports that the national foreclosure inventory has dropped below 1 million units to its lowest level since July 2008. The number, which started inching up in April and May, felled below 2%. On a year-over-year basis, the percentage of home loans in foreclosure is down more than 37% or more than 500,000 mortgages compared to the same period last year.

The volume of foreclosures as a percentage of total inventory is 1.91%, which is a 5.56% month- over- month decrease.
California-based realty track reports that notices were filed on 109,824 residential properties during the month of May. This represents a 5% decrease from April and a 26% year-over-year decrease (May 2013).

The number of filings has actually plummeted to the lowest monthly level since the initial days of the housing bubble and housing market crash, which began in December 2006.

Foreclosure Data by Market

Markets on the West Coast and on the Northeast, along with the City of Chicago have experienced the most foreclosure activity. Although overall foreclosure activity is down, 21 states show a monthly increase in foreclosure activity and 11 states recorded year-over-year increases.

Here are the four metropolitan areas with the biggest annual increase in foreclosure activities:

  • Boston – 44%
  • New York – 23%
  • Washington DC – 15%
  • Philadelphia – 15% %

 

According to Daren Blomquist, vice president at RealtyTrac, “It’s not surprising that some of the states with the longest foreclosure timelines are those with markets still dealing with increasing foreclosure activity even as the country as a whole continues to hit new lows

“It’s not surprising that some of the states with the longest foreclosure timelines are those with markets still dealing with increasing foreclosure activity even as the country as a whole continues to hit new lows,” said Daren Blomquist, vice president at RealtyTrac.

The following states have the highest rate of non-current mortgages—combined foreclosures and delinquencies– in the nation:

  • Mississippi – 13.75%
  • New Jersey – 12.62%
  • Florida – 11.28%
  • New York – 10.91%
  • Louisiana – 10.61%

The five states with the greatest improvement in non-current mortgages are the past 6 months are Florida, Nevada, Arizona, Maryland and California. The five states that have shown the greatest deterioration in non-current mortgages over the same period are: Alaska, West Virginia, Alabama, Mississippi and Louisiana.

In May, Mississippi, Nevada, Alabama, Rhode Island and Massachusetts reported the highest percentage of homeowners with seriously delinquent-90 days or more late with their mortgage payments.

Why You Should Monitor the Shadow Inventory

For foreclosed homes investors what are the most important categories for them to track and monitor would be what are called the “shadow inventory.” This metric has an effect on the entire housing market and individual real estate investments.

The shadow inventory consists of distressed properties that are about to enter the foreclosure pipeline– mortgages that are in serious delinquency — three months behind in payments or have yet to reach foreclosure auction.

Put another way, these are properties that have a high probability of entering the foreclosure market; however, the homes have yet to be included in foreclosure filing figures. It is important for real estate investors to watch this indicator because focusing on foreclosure rates alone can be misleading.

Watching the shadow inventory metrics provides you with the information that you need to make a more precise evaluation of the foreclosure market and overall housing conditions. It put you in a position to make better decisions regarding your investment in the real estate market.

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