The prognosis is in: The housing market is picking up steam. There’s no turning back. Sales volume and prices ticked up on a national level at the end of the summer, with existing home sales up 9.3% in August compared to a year ago, and median prices up 9.5% from a year ago.
All of this leads to a logical question: What about all those foreclosures economists and experts have warned about? Shadow inventory? Are there threats to the recovery that could crop up and throw us off course?
The good news is the foreclosure market is easing. Foreclosure inventory was down to its lowest level in August since April 2010. The 57,000 foreclosures completed in August puts the total number of homes that have foreclosed since September 2008 at 3.8 million, according to CoreLogic’s latest report.
Granted, that’s a lot of foreclosures in the overall housing fallout, and there is still a lot of foreclosure activity out there, depending on your market. But if the housing market were a hospital patient I think the doctors would say the foreclosure condition is improving – perhaps no longer life-threatening.
The five states with the highest number of completed foreclosures for the 12 months ending in August were: California (110,000), Florida (92,000), Michigan (62,000), Texas (58,000) and Georgia (55,000), according to CoreLogic. The five states combined account for 48.1% of all completed foreclosures nationally – which indicates the problem is still generally contained within certain markets.
Meanwhile, the states with the lowest number of completed foreclosures for the 12 months ending in August were: South Dakota (25), District of Columbia (113), Hawaii (435), North Dakota (564) and Maine (612).
The continued downward movement in the foreclosure market is a good indicator that the recovery is picking up speed.
The higher concentration of foreclosures in the five states noted above could continue to dampen or slow the recovery in those states, but again it really depends on the local market. For instance, California is ranked the top state for foreclosures over the last 12 months, but some of our local Bay Area markets aren’t seeing much of that at all.
The main thing to watch is the overall trend, which is definitely sloping down. Thankfully, the shadow inventory problem that many were worried about these past few years seems to have deflated more gradually than initially thought so we didn’t see a second flood of foreclosures all hit the market at the same time at the national level.
It will take some time, still, before foreclosures are completely out of the housing recovery vernacular. But things are looking good. We just have to charge ahead and make sure the systems in place for markets where foreclosures are still rampant are efficient enough to keep moving. Demand for these homes doesn’t seem to be a problem.