Foreclosure Inventory a Hurdle for New Home Construction

News

Completed foreclosure dropped
precipitously
in October compared to September, although they were down to a
significantly lesser extent from a year earlier.  While the foreclosure crisis is no longer
front-page news, CoreLogic’s October National Foreclosure Report, released
today points out that completed foreclosures in October were nearly double the
number in more “normal” times and are a major factor inhibiting a return to
normal levels of new home construction.

During
the month there were 41,000 completed foreclosures nationally compared to
62,000 in September, a -34.1 percent change
The October number was down 14,000 or 26.4 percent from a year earlier
and was 65 percent below the peak of completed foreclosures in September 2010.  It was the 25th month of double
digit year-over-year declines in the
inventory of foreclosed homes.

 

 

Still,
CoreLogic points out that from 2000 to 2006, before the decline in the housing
market, completed foreclosures averaged 21,000 per month.  Since 2008 there have been approximately 5.3
houses repossessed by lenders.

The foreclosure inventory, the
number of homes in some stage of foreclosure, numbered 605,000 units in October
compared to 875,000 a year earlier, a decrease of 30.9 percent.  October is the 36th consecutive
month in which the inventory has declined and it was down 2.1 percent compared
to the previous month.  The foreclosure
inventory represents 1.6 percent of all homes nationwide with a mortgage, down
from 2.1 percent in September and 2.2 percent in October 2013.  The October inventory rate is the lowest
since May 2008.

“While there has been a large
improvement in the reduction of foreclosure inventory, completed foreclosures
remain high
and serve as one of the obstacles to new single-family
construction,” said Sam Khater, deputy chief economist for CoreLogic.
“Until the flow of completed foreclosures declines to normal levels,
new-home construction will not pick up because builders have little incentive
to compete with foreclosure stock.”

CoreLogic president and CEO Anand
Nallathambi pointed out that not only is the foreclosure inventory at a new low
but seriously delinquent loans are also tending down.  “At current rates, we can expect the
foreclosure inventory to slip below 500,000 units during 2015,” he said.

Every state but West Virginia and
the District of Columbia posted double-digit declines in foreclosure inventory
year over year and in 19 states these were greater than 30 percent.  The largest decreases were in Florida (44.9
percent) and Utah (41.6 percent.)  West
Virginia posted the smallest change, -8.9 percent while and the District of
Columbia’s inventory increased 17.3 percent.

The five states with the highest
number
of completed foreclosures for the 12 months ending in October 2014 were:
Florida (118,000), Michigan (45,000), Texas (36,000), California (29,000) and
Georgia (28,000).These five states accounted for almost half of all completed
foreclosures nationally.

The five states with the highest
foreclosure inventory as a percentage of all mortgaged homes were: New Jersey
(5.5 percent), Florida (4.1 percent), New York (4.1 percent), Hawaii (2.9
percent) and Maine (2.6 percent).  All
five are judicial foreclosure states.

 

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