RealtyStore, a provider of foreclosure and financially distressed real estate listings, completed its review of real estate-owned (REO) foreclosure activity through June 2010, finding REO inventory has increased materially and is poised to add additional inventory through the end of the year. In June alone, counts of new REO properties increased 28.1 percent over May’s counts. June’s inventory also represented a 6.4 percent increase year-over-year.
“This is a significant increase in foreclosure activity, and it correlates with data we’ve seen thus far pointing to a further weakening of the US housing markets.” said Tim Chin, chief executive officer of RealtyStore. “Adding further acceleration in foreclosure proceedings initiated by Fannie Mae and Freddie Mac (who upped their REO activity by 17.6 percent and 15.5 percent respectively in late July), we expect REO inventory to remain elevated into Q4 2010.”
In addition, further fueling the foreclosure escalation are estimates that suggest approximately 25 percent of homeowners with a mortgage owe more than their home is worth. Additional market price declines, which may result from further softening in home demand in the near term, could result in more foreclosures from this segment, and contribute to a rise in prime loan failures.
With REO inventory growing there is tremendous downward pressure on prices resulting in a buyer’s market in most areas of the country. Mortgage interest rates remain at historic lows, driving housing affordability to attractive new levels in many markets, according to the latest statistics released by the National Association of Home Builders (NAHB). However, buyers remain very reluctant to enter the market. A continued poor and uncertain employment market continues to weigh down demand.
“According to our statistical model, jobs and incomes are still the primary determinants of REO behavior," said John Stewart, RealtyStore’s chief economist. "Mortgage interest rates remain at historic lows, and this helps conditions for certain distressed homeowners and those able to renegotiate loan terms. However, with a stubbornly high national unemployment rate (9.5 percent as of July) and a lack of job creation, the conditions are ripe to see further increases in REO foreclosures.”
For more information, visit www.RealtyStore.com.