In one sign of strength in the housing market, the inventory of foreclosed homes for sale is shrinking, along with completed foreclosures.
At its worst, the housing market saw 117,000 completed foreclosures in September 2010. According to the latest data from CoreLogic, there were only 37,000 completed foreclosures in April, down from 43,000 in April 2015.
As of April 2016, the national foreclosure inventory included approximately 406,000, or 1.1%, of all homes with a mortgage compared with 530,000 homes, or 1.4%, in April 2015. The April 2016 foreclosure inventory rate is the lowest for any month since September 2007, a year before the start of the financial crisis.
“The recovery in home prices and improved labor market have contributed to the drop in seriously delinquent rates,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Over the 12 months through April, the CoreLogic Home Price Index for the U.S. rose 6.2% and the labor market gained 2.6 million jobs. We also found that the seriously delinquent rate fell by about three-quarters of a percentage point.”
All good news. Even better, the number of homeowners who owe more on their mortgages than their homes are worth is down by two-thirds since its 2010 peak. The only downside, there are still about four million underwater homeowners, according to CoreLogic estimates.
The decline in foreclosures is not just good news for individual homeowners. It is also good news for the overall housing market. A foreclosure in a neighborhood tends to reduce the value of surrounding property. Fewer foreclosures might reduce the inventory of available homes, but it increases the value of available homes.