Shadow Inventory Drops below 2 Million Homes

CoreLogicrnsaid today that the shadow inventory or pending supply of homes at the end ofrnJuly consisted of 1.9 million homes with an approximate market value of $293rnbillion. The shadow inventory is a measure of thernnumber of properties that are seriously delinquent, in foreclosure or held asrnREO by mortgage servicers, but not currently listed on multiple listingrnservices (MLSs) and is not typically included in official estimates of unsoldrninventory.  </p

Atrnthe present rate of sales this inventory represents a 3.7 month supply.  In July 2012 there were 2.4 million homes inrnthe shadow inventory and at its peak in 2010 there were 3 million.  The recent figure represents decreases of 22rnpercent and 38 percent respectively from those figures.  Therninventory consisted of 874,000 properties that were seriously delinquent (1.8rnmonths’ supply), 661,000 in some stage of foreclosure (1.3 months’ supply) andrn318,000 that were already in REO (0.6 months’ supply).</p

CoreLogic said foreclosures wererncompleted in August at a rate only two-thirds that of a year earlier.  There were 48,000 completed foreclosuresrnduring the month compared to 72,000 in August 2012, a decrease of 34rnpercent.  The number was up 1.3 percentrnfrom the 47,000 completed in July. </p

CoreLogic said that, despite thernsignificant year-over-year drop in foreclosures they are still running at morernthan double what might be considered a “typical” rate.  The company’s analysis points to the 2000 torn2006 period during which completed foreclosures averaged 21,000 per monthrnnationwide.  There have beenrnapproximately 4.5 million homes lost to foreclosure since the housing crisisrnbegan in September 2008.   </p

As of August there were approximatelyrn939,000 homes in the national foreclosure inventory, i.e. homes in some stagernof foreclosure.  This is a 33 percentrndrop from the 1.4 million homes in the inventory in August 2012.  Month over month, the foreclosure inventoryrnwas down 3.2 percent.  The inventoryrnrepresents 2.4 percent of all homes with a mortgage; a year earlier therninventory was at 3.3 percent. </p

The serious delinquency rate, thatrnis homes that are 90 days or more past due, was 5.3 percent at the end ofrnAugust or 2.1 million mortgages.  This isrnthe lowest serious delinquency rate since December 2008.</p

“The foreclosure inventory continuesrnto improve, as exhibited by these recent numbers,” said Dr. Mark Fleming,rnchief economist for CoreLogic. “A surge in completed foreclosures and arnrise in the foreclosure inventory is unlikely given continued house pricernimprovements and shortages of supply in many markets.” </p

“Over the past year, the valuernof the U.S. shadow inventory dropped by $87 billion-a sign of increasedrnnormalcy in the housing market,” said Anand Nallathambi, president and CEOrnof CoreLogic. “With a year-over-year decrease of 22 percent in July, thernshadow inventory has now declined steadily for 10 consecutive months.”</p

Five states, Florida, Michigan,rnCalifornia, Texas, and Georgia accounted for almost half of all completedrnforeclosures over the 12 months ending in August.  Florida had 111,000 completed foreclosurernactions, nearly double the number completed in number two state Michigan.</p<pThe highest foreclosure inventory is held inrnFlorida (7.9 percent), followed by New Jersey (6.2 percent), New York (4.9rnpercent), Maine (4.0 percent) and Connecticut (3.9 percent).rn

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