CoreLogic: Foreclosures Decline as Economy Improves
- Apr 13, 2016
Irvine, Calif—The national foreclosure inventory declined 23.9 percent in February 2016 compared with February 2015, and 2.6 percent in February 2016 from January 2016, marking 52 months of consecutive year-over-year declines, according to CoreLogic’s latest National Foreclosure Report.
Revealing even more good news, the report stated that the number of completed foreclosures in February 2016 was down 71.3 percent from the peak of 117,776 in September 2010, and the February 2016 foreclosure inventory rate is the lowest for any month since November 2007.
However, there’s still a ways to go when it comes to getting back to pre-recession levels. Completed foreclosures declined 13.9 percent to 34,000 in February 2016 from the 39,000 in January 2016, but before the housing market decline in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
Foreclosure inventory encompasses the number of homes at some stage of foreclosure and completed foreclosures represent the total number of homes lost to foreclosure, the report explained. There have been nearly 6.2 million completed foreclosures across the country since the financial crisis began in September 2008.
The national foreclosure inventory as of February 2016 included about 434,000, or 1.1. percent of all homes with a mortgage compared with 571,000 homes (1.5 percent) in February 2015. Additionally, the number of mortgages in serious delinquency declined 19.9 percent from February 2015 to February 2016, with 1.3 million mortgages, making the serious delinquency rate in February 2016 the lowest since November 2007.
CoreLogic Chief Economist Dr. Frank Nothaft chalks up this improvement largely to the improving housing market and job creation. “Rising home prices in most markets has restored home equity for many owners over the past year, and an improving labor market has enabled families to remain current on their mortgage loans,” Nothaft told MHN. “During 2015, the CoreLogic Home Price Index for the U.S. rose 5.5 percent, helping to reduce the number of ‘underwater’ homeowners by about 1 million. ”
He added that job creation averaged 207,00 during the first two months of 2016 and the economy created 2.8 million jobs over the year ending in March.
Incomes also grew over the past year.”More income and improved household finances have helped bring serious delinquency down in nearly every state,” he said.
However, some states are doing better than others. Oil-producing states like North Dakota and West Virginia actually had serious delinquency rates increase largely due to fuel price declines.
“The percent of owners who are seriously delinquent on their loans will continue to decline in national data,” Nothaft explained. “This pattern will be reflected in most local housing markets, but not all. For example, local economies with a large portion of employment in oil production may experience an increase in delinquency rates as firms scale back jobs related to the low-level of current oil prices.”
Other state highlights include:
- The highest number of completed foreclosures for the 12 months ending February 2016: Florida (72,000), Michigan (49,000), Texas (29,000), California (25,000) and Ohio (23,000). These five states accounted for almost half of all completed foreclosures nationally.
- The lowest number of completed foreclosures over the same 12-month period: North Dakota (312), Wyoming (574), West Virginia (627), Alaska (682) and Washington, D.C. (113)
- The highest foreclosure inventory rates in February 2016: New Jersey (4.0 percent), New York (3.4 percent), Hawaii (2.3 percent), Florida (2.2 percent) and D.C. (2.2 percent)
- The lowest foreclosure inventory rates in February 2016: Alaska (0.3 percent), Minnesota (0.4 percent), Arizona (0.4 percent), Colorado (0.4 percent) and Utah (0.4 percent)
Looking toward the future, CoreLogic President & CEO Anand Nallathambi had a positive outlook. “Home price gains have clearly been a driving force in building positive equity for homeowners,” he said. “Longer term, we anticipate a better balance of supply with demand in many markets which will help sustain healthy and affordable home values into the future.”
Nothaft added to this sentiment. “We expect further declines in the foreclosure rate during 2016 because we project that home prices will continue to rise in our national index and economic growth will lead to further job creation and labor market improvement.”