An article by Realtor.com illustrates some interesting foreclosure statistics. According to Realtor.com, the forelcosure rate for 2013 was 26% below 2012. Foreclosure filings include default notices, scheduled auctions, and bank repossessions. Additionally, the rate is a staggering 53% lower than 2010. 2010 was the height of the foreclosure debacle.
This certainly appears to be good news but the picture may not be as rosy as it may appear. First, many states imposed moratoria on foreclosure actuvity in order to clear crowded foreclosure dockets. There were no such moratoria at the height of foreclosure filings (2010).
Secondly, with each home foreclosed, there is theoretically one less home in the distressed category since, statistically, a home purchased from foreclosure is less likey to be foreclosed upon (at least for a number of years). As an example, suppose that there are 1,000 homes in a geopgraphic area and 10% are in foreclosure and taken back by the bank. That is 100 homes. The following year, there is theoretically only 900 homes in the area that are subject to foreclosure. The same 10% rate means that only 90 were foreclosed and you could tout that as an encouragng sign. In reality it is not as encouraging as it may seem.
Thirdly, foreclosure rates drop as shadow inventory rises. No one seems to address shadow inventory any longer but recent statistics indicate that there is as much as 3 to 3.5 years of shadow inventory.
Just some food for thought..
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