Foreclosure Inventory Drops by One-Third

Foreclosure inventory in January was down by one-third over the year, although completed foreclosures ticked up over the month, according to CoreLogic’s National Foreclosure Report released Thursday.

Demonstrating an 11.8 percent increase over the month, completed foreclosures totaled 48,000 in January. However, despite the monthly increase, foreclosures were down 19 percent over the year. January’s total remains elevated compared to a historical norm of 21,000 foreclosures per month by CoreLogic’s standard.

About 2 percent of all mortgaged homes were part of the foreclosure inventory in January, according to CoreLogic’s data, while Black Knight Financial Services reported the rate at 2.37 percent in its foreclosure inventory report released the same day as CoreLogic’s.

“We expect to see continued progress in the months ahead, but the judicial foreclosure states (South Carolina IS a Judicial State) will continue to lag the rest of the country in working down their backlogs of foreclosed properties,” said Anand Nallathambi, president and CEO of CoreLogic.

In non-judicial states, there are 954 mortgages per foreclosure, while in judicial states, the ratio stands at 896 mortgages per foreclosure, according to CoreLogic chief economist Mark Fleming, who points out, “Although this is a big improvement relative to the height of the foreclosure crisis, a healthier ratio would be one in every 2000.”

However, in January, non-judicial states dominated the top five list of states with the highest numbers of completed foreclosures over the year. (DSN/CoreLogic)

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2014: The Decline of Housing Inventory

Housing inventory declined more than 9 percent over the month of January. The decline marks the fourth consecutive monthly drop in inventory. “A year ago, we didn’t think inventory could go any lower, yet we’re beginning 2014 with another disappointment,” Redfin stated in its January report.

Sellers say they believe they will receive better offers during spring home buying season, and they believe when they do list their homes, they will sell easily and quickly.

The report also indicates the market is in somewhat of a catch-22: Sellers are reluctant to list their homes for sale while inventory is so low, as they are unsure they will be able to find and afford a new home, according to Redfin.

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Home Flippers Win BIG!

RealtyTrac released on Thursday its Year-End and Q4 2013 Home Flipping Report, which shows single-family home flips—in which a home is purchase and sold again within six months—totaled 156,862 last year, up 16 percent from 2012 and 114 percent from 2011.

According to the company, home flips accounted for 4.6 percent of all single-family home sales in 2013, up from 4.2 percent the prior year and 2.6 percent in 2011. In the fourth quarter alone, flips made up 3.8 percent of sales, a decline from 3.9 percent in Q3 2013 and 7.1 percent in Q4 2012.

The average gross profit for a home flip last year was $58,081, up nearly $13,000 from the 2012 average.

“Strong home price appreciation in many markets boosted profits for flippers in 2013 despite a shrinking inventory of lower-priced foreclosure homes to purchase,” said RealtyTrac VP Daren Blomquist.

According to Blomquist, 21 percent of all properties flipped last year were purchased out of foreclosure, down from 27 percent in 2012.

“Meanwhile flipped homes were still purchased at an average discount of 13 percent below market value in 2013, the same average discount as 2012, indicating that investors are finding discounted buying opportunities outside of the public foreclosure process—particularly in those markets with the biggest increases in flipping for the year,” he added. (DSN)

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Un-Listed Sales Soar!

Many in the real estate industry believe there is a listing shortage, but a close look at the numbers suggests buyers in most markets are purchasing homes in increasingly larger volumes—even if some of those sales involve off-market homes not listed for sale.

In July there was a 5.1-month supply of unsold existing homes, unchanged from June but down from a 6.3-month supply in July 2012, according to the

National Association of Realtors(NAR). But despite the lower inventory, the volume of home sales continues to increase.

“Existing-home sales,” NAR reported, “have stayed well above year-ago levels for the past two years, while the median price shows seven straight months of double-digit year-over-year increases.”

…In real estate, sales have been increasing month after month for nearly two years and prices are 11 percent higher than a year ago.

“The robust housing market recovery is occurring in spite of tight access to credit and limited inventory,” said NAR Chief Economist Lawrence Yun back in May of the April numbers. “Without these frictions, existing-home sales easily would be well above the 5-million unit pace.”

But it’s not just off-market foreclosure auctions that account for the rise in sales despite a lack of listing inventory. Buyers and their real estate brokers are getting creative in buying off-market inventory in other ways as well. These creative buyers and brokers are contacting distressed homeowners and other potentially motivated sellers to see if they want to sell even if they have not yet listed for sale. They’re finding homeowners who are about to list through word of mouth or social media, and they’re persistently reaching out to banks—the most success comes when dealing with smaller local banks—that have foreclosure inventory not yet listed for sale.

Many of these REOs are not listed for sale yet and are being listed at a painstakingly slow pace from the perspective of buyers who are hungry for more inventory to purchase. Still, the presence of this unlisted REO inventory should give buyers hope that they will find a property (or properties) to purchase, provided they are willing to be creative and patient in their search.

1 in 5 Foreclosures Vacated by Owner

As the foreclosure process drags on in certain states, sometimes the homeowner will beat the lender and leave before a foreclosure sale date is set.

According to RealtyTrac’s estimate, 167,680 properties in foreclosure have been abandoned by their owner. The total represents 20 percent of all foreclosures.

Adding to this total are the more than 540,000 banked-owned properties still waiting to be sold to a third party.

“Somewhat ironically, efforts to slow the slide of the housing market in previous years are now hampering a smooth recovery by holding back inventory of homes that almost certainly must sell in the future but are not yet listed for sale,” explained Daren Blomquist, VP atRealtyTrac.

“Efforts to prevent unnecessary foreclosures and mitigate their impact on home values have resulted in a foreclosure process that takes an average of 477 days nationwide, and more than two years in some states – which is holding many of these must-sell properties off the market,” Blomquist said.

In this current low-inventory environment, the release of these vacant foreclosures should not cause prices to plummet, according to RealtyTrac.

“Even if all these homes flooded the market simultaneously they would likely not cause the once-feared double dip in prices given supply constraints from non-distressed sellers and stronger demand,” Blomquist said. “Given these market dynamics, it’s not surprising to see that Florida, Illinois and New Jersey – states with three of the four longest foreclosure timelines – have all had laws take effect in the last six months that speed up the foreclosure process on vacant properties. These laws should help provide some extra supply and possibly help reduce the threat of another housing price bubble forming in these markets.” (RealtyTrac/DSN)

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Foreclosure Inventories in Judical States

National foreclosure inventory fell to 3.2 percent in April, its lowest level in four years, according to Lender Processing Services’ Mortgage Monitor report.

The report also revealed a hike in foreclosure sales in judicial states (Hilton Head Island is in Beaufort County South Carolina and IS a Judical State), which stimulated the decline in the national foreclosure inventory.

Foreclosure sales in judicial states jumped 17 percent over the month of April and reached their highest level since 2010 when foreclosure moratoria and process reviews brought the foreclosure process to a near halt across the nation, LPS stated.

Despite the month’s increase, foreclosure inventories in judicial states remain seven times higher than levels occurring prior to the foreclosure crisis and are three times the levels seen in non-judicial states.

Mortgage delinquencies nationwide declined 5.81 percent over the month of April. The national delinquency rate now stands at 6.21 percent.

LPS also calculated a 13.4 percent fall in delinquencies from January to April this year. The drop is the largest decline since 2004.

Foreclosure timelines for judicial and non-judicial states continue to be disparate and are growing, according to LPS. By the time a loan reaches foreclosure sale, it has spent an average of 20.5 months in delinquency in non-judicial states and an average of 33.3 months in judicial states. (LPS/DNS)

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Existing-Home Sales, Prices Jump in May

Existing-home sales rose a solid 4.2 percent in May to an annual sales rate of 5.18 million, the highest level since November 2009, the National Association of Realtors reported Thursday.

Economists had expected existing-home sales to hit 5.0 million.

The median price of an existing-home jumped $16,200, or 8.4 percent, for the month and was up $27,700, or 15.4 percent, from May 2012.
The inventory of homes for sale rose to 2.22 million from 2.15 million in April, translating to a 5.1 month supply compared with April’s 5.2 month supply.

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Shortage of Foreclosures & Short-Sales Driving Market

The available supply of foreclosures and short sales previously stunted the recovery for new home sales, according to CoreLogic’s May report. Though, now that the supply of distressed homes and existing-homes for sale has fallen, there’s more room for the new home sales market to expand.

According to CoreLogic, the number of seriously delinquent mortgages (90-plus delinquencies, including foreclosures and REOs), peaked at 3.7 million in January 2010, but has fallen by 1.2 million, or by 33 percent.

As delinquencies decline, new home sales are rebounding after hitting low points over recent years. Citing data from the Census Bureau, CoreLogic reported new home sales have increased 19 percent from a year ago in March.

Improvements in the new home sales market also benefits the economy in several ways since new homes require the acquisition and development of new land, the purchase of supplies, and the need for labor.

According to the report, every new home requires five full-time jobs for 12 months. (DSN)

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Foreclosure Inventory Falls

The number of residential properties lost to foreclosure increased from February to March, while inventory was down from month and year ago levels, according to data from CoreLogic.

In its most recent foreclosure report, the data provider reported 55,000 homes were lost to foreclosure in March, up 6 percent from 52,000 completed foreclosures in February. Still, completed foreclosures stood 16 percent lower compared to the year ago level when 66,000 homes were lost to the process.

“In March, completed foreclosures were down 52 percent from the peak in 2010, and almost all of the top 100 major metropolitan areas have declining foreclosure rates,” said Dr. Mark Fleming, chief economist for CoreLogic.

While completed foreclosures have been on the decline, they still remain elevated. Between 2000 and 2006, completed foreclosures averaged 21,000 per month, data from CoreLogic revealed. Since the financial crisis began in September 2008, about 4.2 million homes have been lost to foreclosure.

CoreLogic also reported the number of homes in foreclosure inventory stood at 1.1 million, down 23 percent from March 2012 and down 1.9 percent from February.

“For 17 consecutive months, foreclosures have declined year over year across the U.S,” said Anand Nallathambi, president and CEO of CoreLogic. “Although we still have more than a million homes in some stage of foreclosure, this trend, combined with rising home prices, is another signal of a gradually improving housing market.”

“The foreclosure rate nationally is down 23 percent relative to a year ago, signaling continued reduction in the stock of distressed assets,” Fleming noted. (DSNEWS)

Prices Going UP

August home prices across the United States were up an average 4.6 percent since the start of the year, according to data from Lender Processing Services.

LPS’ Home Price Index, which reflects transacted sales rather than recorded sales, revealed that the average U.S. home price increased to $205,000 in August, up 0.2 percent from July. The average home price in August 2011 was $199,000, or 2.6 percent less than this year’s reading. The most recent price increase brings the HPI up 4.6 percent from January 2012.

The current cycle’s price peak was $266,000, recorded in June 2006.

Minnesota and Michigan led all states in month-over-month price gains, reaching growth of more than one percent. Minnesota saw 1.2 percent improvement from July, while Michigan prices increased 1.1 percent.

Connecticut fared the worst out of the 20 states in the report, reporting -3.7 percent price growth. Illinois followed with -2.4 percent. (LPS, DSN)

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