FORECLOSURE CRISIS: HAS IT REALLY BEEN AVERTED?
Since the foreclosure crisis in 2007, which claimed nearly four million homes, we’ve seen a huge drop in foreclosure filings, real estate experts are jumping in a ‘housing recovery’ situation.
Is the foreclosure crisis really over? 
Looking at the national numbers, they may be pouncing on the right direction. According to the National Association of Realtors, home sales hit a five year high in October and existing home sales is 11% higher than last year’s. In terms of economic growth, the US Commerce Department reports that housing has contributed 0.3% to gross domestic product in the third quarter. Looking at these relatively rosy statistics, it’s easy to see why the word “recovery” is getting tossed around.
What we fail to realize is the fact that housing is and will always be a local entity. It breaks down by state, city, neighbourhood and in some places, even street. The wave of foreclosures has been manifesting at these more local levels — even while national-level data reflects a recovery.
Even as lenders are finally instituting better foreclosure-prevention policies like loan modifications and short sales that keep homes from hitting their books as REOs, local data shows that there’s still a crisis situation.
According to CoreLogic, the top three states with the highest foreclosure rates are Florida (11%), New Jersey (8%) and New York (5%). The average time for a mortgaged home to transition from default to bank repossession in each of these three states has been over two years. Additionally, according to RealtyTrac, New Jersey experienced a 140% increase in filings in October year-over-year and New York nearly a 123% increase.
The states posting the largest home price drops this year are many of the same states where the foreclosure rate has increased this year, including New York, New Jersey, Illinois and Maryland. Foreclosures add downward pressure to overall home prices.
Looking at the silver lining, new borrowers aren’t significantly adding to the default pile and experts project that the fourth quarter will register a decrease in delinquencies. CoreLogic and others believe the worst of the foreclosure crisis has passed.
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