RealtyTrac Foreclosure Report Shows 28% Decrease From May 2012
Foreclosure actions increased by 2.0 percent in May from April’s 75 month low point for foreclosure activity according to RealtyTrac’s U.S. Foreclosure Market Report released June 11. However, the good news is that May 2013 foreclosure filings were still 28 percent below May 2012 filings.
RealtyTrac reports that approximately one in 885 homes were in some stage of foreclosure in May. This does not mean that 1 in 885 homes was lost to foreclosure, but it does indicate that documents related to some phase of foreclosure (Notice of Default, Notice of Trustee Sale, and Bank Reposession) were filed.
Actual lender repossessions (REO) increased by 11 percent in May, but were down by 29 percent as compared to May 2012. 33 states reported increases in REOs with North Carolina, Oregon and Wisconsin having the highest numbers of REO properties added.
Judicial Foreclosure States Lagging In Clearing Foreclosure Inventory
Foreclosure starts were up by 4 percent in May, but were 33 percent lower than for May of 2012. States using judicial foreclosure proceedings were 5 of the top 6 states for foreclosure filings. The state of Nevada, which uses non-judicial foreclosure proceedings, was second after Florida and ahead of Ohio, South Carolina and Illinois.
In general, judicial foreclosure proceedings take longer to complete than non-judicial foreclosures. This results in homes being unavailable for sale for longer periods of time. Lenders are required to complete the foreclosure process and in some cases, they must await expiration of a redemption period before a foreclosed home can be repaired and sold.
In states using non-judicial foreclosure proceedings, the time between the initial foreclosure filing and the foreclosure sale can be as little as three to four months. Quickly turning over foreclosed homes is helpful for improving regional housing markets and making more homes available for purchase. Economists have recently cited low inventories of homes as holding back housing markets in some areas.
California is NOT a judicial foreclosure state, and bank owned properties are a very small percentage of our present inventory.
A lot has been said – by doom and gloom bloggers, and their followers – over the past few years, about the so called “shadow inventory” of foreclosure houses, just waiting for prices to come up before being unleashed upon the public – thereby pushing prices back downward.
If such a myth was anywhere close to being accurate, this past 12 months of lower housing inventory WOULD have been the ideal time for lenders to have taken advantage of. Instead, the reduction of the number of the REO’s ( Bank owned properties.) coming onto the local California real estate market has actually worsened the problem – helping to make prices rise, in almost unprecedented fashion.