January 15th, 2014
The number of homes in the foreclosure process fell in November.
According to the November National Foreclosure Report by CoreLogic, there were approximately 812,000 homes in the U.S. foreclosure inventory in November, down 4.6 percent from October 2013. Year over year, the decline was 34 percent, as there were 1.2 million homes in the foreclosure process in November 2012. The most recent figure represented 2.1 percent of all homes, while the previous year's figure accounted for 3 percent of all homes.
As the inventory continues to decline, there is further indication that the economy is recovering and price appreciation is helping more homeowners attain equity.
"As the negative equity crisis abates and home prices continue to rise, most people are prioritizing the payment of their mortgage obligations," said Anand Nallathambi, president and CEO of CoreLogic. "The result is a double-digit drop in the inventory of seriously delinquent homes in 48 states as of October."
Completed foreclosures dwindle
In addition to a declining foreclosure inventory, the number of completed foreclosures, which are homes lost in the foreclosure process, saw noticeable decreases in November. The report found that foreclosure completions dropped from 50,000 in October to 46,000 in November, an 8.3 percent decline. Year over year, there was a 29 percent decrease from 64,000.
Since the beginning of the housing downturn in 2007, there have been 4.7 million completed foreclosures. Between 2000 and 2006, there were only 21,000 foreclosure completions each month. Although November's figure is a little over 50 percent higher than the pre-recession average, the gradual decline hints that the housing market is working back toward healthier loan performance, which may be encouraging news for potential homebuyers.
CoreLogic also reported that fewer than 2 million mortgages – 5 percent of all loans – were 90 days or more past due, the lowest rate for seriously delinquent mortgages since November 2008.
"Nationally, loan performance continues to improve," said Mark Fleming, CoreLogic chief economist. "The rate of seriously delinquent loans is at a new five-year low, down 26 percent relative to a year ago."
The leading states for completed foreclosures
The District of Columbia had the lowest number of foreclosure completions for the 12 months ended November 2013, at only 51. North Dakota (401), Hawaii (480), West Virginia (524) and Wyoming (716) rounded out the top five.
Conversely, Florida (115,000) had the highest number of completed foreclosures, followed by Michigan (54,000), California (42,000), Texas (40,000) and Georgia (36,000). CoreLogic noted that these states accounted for nearly half of national foreclosure completions.
Florida also had the highest percentage – 6.6 percent – of mortgaged homes in its foreclosure inventory. New Jersey (6.5 percent), New York (4.7 percent), Maine (3.5 percent) and Connecticut (3.5 percent) capped off the top five.
Wyoming had the smallest inventory, at 0.4 percent of all mortgaged homes.
Drop in shadow inventory
The shadow inventory, which is also known as pending supply, was 1.7 million homes in October, valued at $256 billion. In the previous year, the shadow inventory had a value of $348 billion, indicating a 26.4 percent year-over-year decrease.
"The shadow inventory continues to decline as well, decreasing at an average monthly rate of 46,000 units over the last year," Fleming said. "Healthy market levels of shadow inventory are around 650,000 units, so there is more to be done, but the trend is in the right direction."
Nearly 50 percent of homes in the shadow inventory are delinquent but not yet in the foreclosure inventory.