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Shadow Inventory Down 18 Percent Year-Over-Year

NationalMortgageProfessional.com
Jul 09, 2013

CoreLogic released its May National Foreclosure Report with a supplement featuring quarterly shadow inventory data as of April 2013. There were 52,000 completed foreclosures in the U.S. in May 2013, down from 71,000 in May 2012, a year-over-year decrease of 27 percent. On a month-over-month basis, completed foreclosures increased 3.5 percent, from 50,000 in April 2013 to the May level of 52,000. Current residential shadow inventory as of April 2013 was under two million units, representing a supply of 5.3 months. The overall shadow inventory is down 34 percent from its peak in 2010, when it reached three million homes, and down 18 percent from a year ago, when it was at 2.4 million. As a basis of comparison to the 52,000 completed foreclosures reported for May 2013, prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 4.4 million completed foreclosures across the country. As of May 2013, approximately one million homes in the U.S. were in some stage of foreclosure, known as the foreclosure inventory, compared to 1.4 million in May 2012, a year-over-year decrease of 29 percent. Month-over-month, the foreclosure inventory was down 3.3 percent from April 2013 to May 2013. The foreclosure inventory as of May 2013 represented 2.6 percent of all homes with a mortgage compared to 3.5 percent in May 2012. "The stock of seriously delinquent homes, which is the main driver of shadow inventory, is at the lowest level since December 2008," said Dr. Mark Fleming, chief economist for CoreLogic. "Over the last year it has decreased in 42 states by double-digit figures, resulting in rapid declines in shadow inventory for the first quarter of 2013." At the end of May 2013, there are fewer than 2.3 million mortgages, or 5.6 percent, in serious delinquency (SDQ, defined as 90 days or more past due, including those loans in foreclosure or REO). The rate of seriously delinquent mortgages is at its lowest level since December 2008. "We continue to see a sharp drop in foreclosures around the country and with it a decrease in the size of the shadow inventory. Affordability, despite the rise in home prices over the past year, and consumer confidence are big contributors to these positive trends," said Anand Nallathambi, president and CEO of CoreLogic. "We are particularly encouraged by the broad-based nature of the housing market recovery so far in 2013." The five states with the highest number of completed foreclosures for the 12 months ending in May 2013 were: Florida (103,000),California (76,000), Michigan (64,000), Texas (51,000) and Georgia (47,000).These five states account for almost half of all completed foreclosures nationally. The five states with the lowest number of completed foreclosures for the 12 months ending in May 2013 were: District of Columbia (108), Hawaii (453), North Dakota (467), West Virginia (517) and Maine (644). The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (8.8 percent), New Jersey (six percent), New York (4.8 percent), Maine (4.1 percent) and Connecticut (4.1 percent). The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.5 percent), Alaska (0.6 percent), North Dakota (0.6 percent), Nebraska (0.8 percent) and Virginia (0.8 percent). As of April 2013, shadow inventory was under two million properties, or 5.3 months' supply, and represented 85 percent of the 2.3 million properties currently seriously delinquent, in foreclosure or REO. Of the less than two million properties currently in the shadow inventory, 890,000 properties are seriously delinquent (2.4 months' supply), 761,000 are in some stage of foreclosure (two months' supply) and 336,000 are already in REO (0.9 months' supply). The value of shadow inventory was $314 billion as of April 2013, down from $386 billion in April 2012 and down from $320 billion six months prior, in October 2012.
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