CoreLogic Reports U.S. Foreclosure Inventory Down 33 Percent Nationally From a Year Ago
October 08, 2013, Irvine, Calif. –
—Shadow inventory falls to 1.9 million homes, the lowest level since August 2008—
CoreLogic® (NYSE: CLGX), a leading residential property information, analytics and services provider, today released its August National Foreclosure Report with a supplement featuring quarterly shadow inventory data as of July 2013.
According to CoreLogic analysis:
- There were 48,000 completed foreclosures in the U.S. in August of 2013, down from 72,000 in August 2012, a year-over-year decrease of 34 percent. On a month-over-month basis, completed foreclosures increased 1.3 percent, from 47,000 in July 2013*.
- Overall residential shadow inventory, as of July 2013, was 1.9 million homes, accounting for a value of $293 billion, representing a supply of 3.7 months. This was down 22 percent from a year ago, when it was at 2.4 million; and down 38 percent from its peak in 2010, when it reached 3 million homes.
As a basis of comparison to the 48,000 completed foreclosures reported for August 2013, prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 4.5 million completed foreclosures across the country.
As of August 2013, approximately 939,000 homes in the U.S. were in some stage of foreclosure, known as the foreclosure inventory, compared to 1.4 million in August 2012, a year-over-year decrease of 33 percent. Month over month, the foreclosure inventory was down 3.2 percent from August 2013 to July 2013. The foreclosure inventory as of August 2013 represented 2.4 percent of all homes with a mortgage compared to 3.3 percent in August 2012.
At the end of August 2013, there were approximately 2.1 million mortgages, or 5.3 percent, in serious delinquency (SDQ, defined as 90 days or more past due, including those loans in foreclosure or real estate owned, REO). The rate of seriously delinquent mortgages is at its lowest level since December 2008.
“The foreclosure inventory continues to improve, as exhibited by these recent numbers,” said Dr. Mark Fleming, chief economist for CoreLogic. “A surge in completed foreclosures and a rise in the foreclosure inventory is unlikely given continued house price improvements and shortages of supply in many markets.”
"Over the past year, the value of the U.S. shadow inventory dropped by $87 billion—a sign of increased normalcy in the housing market,” said Anand Nallathambi, president and CEO of CoreLogic. “With a year-over-year decrease of 22 percent in July, the shadow inventory has now declined steadily for 10 consecutive months.”
- The five states with the highest number of completed foreclosures for the 12 months ending in August 2013 were: Florida (111,000), Michigan (60,000), California (58,000), Texas (43,000) and Georgia (40,000).These five states accounted for almost half of all completed foreclosures nationally.
- The five states with the lowest number of completed foreclosures for the 12 months ending in August 2013 were: District of Columbia (94), North Dakota (463), Hawaii (492), West Virginia (501) and Wyoming (723).
- The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (7.9 percent), New Jersey (6.2 percent), New York (4.9 percent), Maine (4.0 percent) and Connecticut (3.9 percent).
- The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.4 percent), Alaska (0.6 percent), North Dakota (0.7 percent), Nebraska (0.7 percent) and Colorado (0.7 percent).
Shadow Inventory Highlights:
- As of July 2013, shadow inventory was under 2 million properties, representing 3.7 months’ supply or 85 percent of the 2.2 million properties that were seriously delinquent, in foreclosure or REO.
- Of the fewer than 2 million properties in the shadow inventory (Figures 1 and 2), 874,000 properties were seriously delinquent (1.8 months’ supply), 661,000 were in some stage of foreclosure (1.3 months’ supply) and 318,000 were already in REO (0.6 months’ supply).
- The value of shadow inventory was $293 billion as of July 2013, down from $380 billion in July 2012.
CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of properties that are seriously delinquent, in foreclosure or held as REO by mortgage servicers, but not currently listed on multiple listing services (MLSs). Transition rates of “delinquency to foreclosure” and “foreclosure to REO” are used to identify the currently distressed unlisted properties most likely to become REO properties. Properties that are not yet delinquent, but may become delinquent in the future, are not included in the estimate of the current shadow inventory. Shadow inventory is typically not included in the official reporting measurements of unsold inventory.
*July data was revised. Revisions are standard, and to ensure accuracy, CoreLogic incorporates newly released data to provide updated results.
To download a copy of the National Foreclosure Report, please visit:
CoreLogic Foreclosure Report August 2013
Foreclosure Inventory Methodology
The data in this report represents foreclosure activity reported through August 2013.
This report separates state data into judicial vs. non-judicial foreclosure state categories. In judicial foreclosure states, lenders must provide evidence to the courts of delinquency in order to move a borrower into foreclosure. In non-judicial foreclosure states, lenders can issue notices of default directly to the borrower without court intervention. This is an important distinction since judicial states, as a rule, have longer foreclosure timelines, thus affecting foreclosure statistics.
A completed foreclosure occurs when a property is auctioned and results in the purchase of the home at auction by either a third party, such as an investor, or by the lender. If the home is purchased by the lender, it is moved into the lender’s real estate owned (REO) inventory. In “foreclosure by advertisement” states, a redemption period begins after the auction and runs for a statutory period, e.g., six months. During that period, the borrower may regain the foreclosed home by paying all amounts due as calculated under the statute. For purposes of this Foreclosure Report, because so few homes are actually redeemed following an auction, it is assumed that the foreclosure process ends in “foreclosure by advertisement” states at the completion of the auction.
The foreclosure inventory represents the number and share of mortgaged homes that have been placed into the process of foreclosure by the mortgage servicer. Mortgage servicers start the foreclosure process when the mortgage reaches a specific level of serious delinquency as dictated by the investor for the mortgage loan. Once a foreclosure is “started,” and absent the borrower paying all amounts necessary to halt the foreclosure, the home remains in foreclosure until the completed foreclosure results in the sale to a third party at auction or the home enters the lender’s REO inventory. The data in this report accounts for only first liens against a property and does not include secondary liens. The foreclosure inventory is measured only against homes that have an outstanding mortgage. Homes with no mortgage liens can never be in foreclosure and are, therefore, excluded from the analysis. Approximately one-third of homes nationally are owned outright and do not have a mortgage. CoreLogic has approximately 85 percent coverage of U.S. foreclosure data.
Shadow Inventory Methodology
CoreLogic uses its Loan Performance Servicing and Securities databases to size the number of 90+ day delinquencies, foreclosures and real estate owned (REO) properties. Cure rates, which measure the proportion of loans in one stage of default that cured (versus moving to more severe states of default), are applied to the number of loans in default at each stage of default. CoreLogic calculates the share of loans in default that are currently listed on MLS by matching public record properties in default to MLS active listings. It applies the percentage of defaulted loans that are currently listed to the estimate of outstanding loans that will proceed to further stages of default to calculate the pending supply inventory and adds that to the reported visible inventory. Visible inventory is compiled from CoreLogic ListingTrends. To determine months' supply for visible and shadow inventories, CoreLogic uses the number of non-seasonally adjusted home sales according to CoreLogic data.
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