Article By Jim Buchta at StarTribune.com
Foreclosure inventory in Minnesota was among the lowest in the nation, bolstering the notion that foreclosure prevention efforts and a strong economy have been a boon to the state’s homeowners, according toCoreLogic’s National Foreclosure Report.
The states with the lowest foreclosure inventory rate, which represents the number of homes at some stage in the foreclosure process, during February were Alaska (0.3 percent), Minnesota (0.4 percent), Arizona (0.4 percent), Colorado (0.4 percent) and Utah (0.4 percent).
Nationwide, the national foreclosure inventory included approximately 434,000, or 1.1 percent, compared with 571,000 homes, or 1.5 percent, in February 2015.
Completed foreclosures or the total number of homes lost to foreclosure, declined 10 percent compared with February 2015 to just 38,000 properties. Compared with a peak of 117,776 in September 2010, completed foreclosures fell 71.3 percent.
CoreLogic said that since the start of the financial crisis in September 2008, there have been about 6.2 million completed foreclosures across the country. Since homeownership rates peaked in the second quarter of 2004, there have been approximately 8.2 million homes lost to foreclosure.
Frank Nothaft, chief economist for CoreLogic attributed the trend to income growth and improved. “Job creation averaged 207,000 during the first two months of 2016, and incomes grew over the past year,” he said in a statement.
The states with the highest number of completed foreclosures for the 12 months ending in February 2016 were Florida (72,000), Michigan (49,000), Texas (29,000), California (25,000) and Ohio (23,000), all o which accounted for almost half of all completed foreclosures nationally.
In July 2011, foreclosures and short sales accounted for 45.4% of home sales in the Twin Cities. In July 2013, these same market segments made up only 26% of home sales. As far as new listings, in July 2011, distressed properties made up 41.2% of the market, but in July 2013, only 17.9%.
Traditional sellers are coming back into the market. All new listings were up 24.6%, but the traditional homes on the market were up 55.7%, the highest increase in almost ten years. Inventory is still low, down about 13% from July 2012 which is making this a seller’s market. The average days on market time is now 72 days and sellers are receiving an average of 97.5% of asking price which is the highest ratio in about seven years.
Double click graph to enlarge.
Did you know that one in ten home buyers this year have been through a short sale or foreclosure? This number is more than double the number of the same type of buyers in 2012. If people keep their credit in tip top shape, pay bills on time, have a good employment record, and save money for a down payment it is possible to get certain types of mortgages just two to three years after a foreclosure or short sale. The length of time can also depend on the circumstances of the foreclosure or short sale, such as an illness, layoff or death. Divorce is not one of those circumstances that helps. With around 150,000 homes in Minnesota being sold as foreclosures or short sales from 2005 to 2012, that makes for a lot of former homeowners that could get back into the housing market as buyers! If you have been through a short sale or foreclosure and would like to buy a home, contact your mortgage banker to see what your options are.
Shadow inventory refers to distressed homes that are not yet on the market. This includes homes where the owner is over three months behind on mortgage payments, homes in foreclosure and homes that the bank owns but has not yet listed.
According to Corelogic, shadow inventory is down about 18.2% from one year ago. Nationally, foreclosure inventory is also down about 29% from one year ago. Homeowners that are delinquent on their mortgages are what creates the shadow inventory problem but this number has significantly decreased in the past year, with owners delinquent over 90 days down by 22.7%.
January 2010 was the height of the mortgage delinquency period. Right now the number of delinquent loans is still 1.4 times higher than the period of 1995 – 2005, but it is down significantly from the peak.
What does this mean? Lower shadow inventory means less distressed properties coming on the market. Distressed properties bring home prices down, so with less of those properties, prices can rise easier.