Fewer homeowners are missing their mortgage payments, bringing down the number of foreclosed homes and ensuring that the housing market continues to improve.
The number of homes on the path to foreclosure dropped to a seven-year low in the third quarter. According to RealtyTrac Inc., foreclosure starts slipped 13 percent in the third quarter compared to the previous quarter. On a year-over-year basis they’re down 39 percent. The firm also reported that in the July-September time frame, lenders began foreclosure action on 174,366 homes. That’s the lowest number since the second quarter of 2006.
Fewer homes in the foreclosure path means fewer foreclosed properties in the future. Good job numbers, a hike in home prices, and fewer bad loans are helping keep the numbers low.
“It’s looking really good that there are not more coming into the pipeline,” Daren Blomquist, a vice president at RealtyTrac told DailyFinance.com. “Barring any other economic shock to the system, we expect that to bode well going forward.”
On an annual basis, foreclosure starts dropped in 38 states. But, they did increase in 11 states, including Maryland, Oregon, New Jersey and Connecticut.
Housing Market Continues to Be a Cause of Worry
Despite the Fed doing all it can to entice buyers with lucrative mortgage rates, few are taking the bite. And that is a cause of worry, according to a report at CNBC.com.
“Buyers are not jumping into the golden carriage to attend the best party ever staged,” the report said.
It’s all good that home prices are up more than 12 percent year-over-year, according to the Case-Shiller home-price index, but the report said what’s worrisome is that prices inched up only 0.6 percent on a month-to-month basis.
Average Americans are still not investing in that second home, but they are “cleaning up their balance sheet” by refinancing their existing homes, the report said. There are far more people refinancing than taking out loans to buy a new home, and that’s not a healthy sign.
Recent interest rate hikes are also detrimental to the health of the market, the report said. The rising rates are scaring away many potential first-time buyers, who are now preferring to rent rather than buy. First-time buyers constitute one of the largest segments in the market, and if they hold off, recovery will be crippled.
On the same vein, a separate Wall Street Journal report said that the fundamental factors behind a typical housing market recovery are still missing. Emphasizing the lack of first-time buyers, the report said that since 2012, investors have been driving up prices and accelerating market activity. That’s not a normal phenomenon.
“No matter how the bulls may spin their argument, it’s far from a real recovery,” the report said.
Consider this: Almost 24 percent of all homes with a mortgage had negative equity, and more than 12 million homes remain underwater. Also, the report said that mortgage delinquency rates of single-family homes are at 9.41 percent – that’s quite high when compared to years past.
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