Although experts expected to see a drop in the number of foreclosed on homes following the peak of the recession, most are surprised at just how quickly the housing market is recovering. In fact, since the “great recession”, rates for foreclosure recently dropped to their lower level yet.
Since the big housing bust, a stronger economy and healthier US housing market are responsible for dwindling foreclosures. With this, it becomes obvious that foreclosures in the past few years have gone from being a national crisis to primarily a concern that is market specific.
There are some highly populated areas of the county where the number of foreclosures is still relatively high to include San Diego California, New York, New York, and Philadelphia, Pennsylvania. While numbers have declined, foreclosures are still somewhat of a challenge in these particular regions of the country.
Dropping Foreclosure Numbers
In data collected by RealtyTrac, Inc., the number of homes that banks repossessed last year dropped 18 percent, being the lowest reported since 2006. Just one year later, the country was hit with the subprime mortgage crisis.
Although several factors come into play as to why foreclosures are down, one in particular is that the number of homes that started the foreclosure process the prior year was down. In fact, in 2014, there was a 14 percent decrease in the number of homes that started into the foreclosure process compared to one year prior.
Last year, more than 643,000 homes started into the foreclosure process, which from 2009 is an impressive 70 percent reduction. There was also a decline in the number of homes that lenders repossessed. Last year, numbers dropped to just over 327,000. In looking at the peak from 2008, that is a 69 percent reduction. At this point, foreclosures are not a major threat to the value of homes throughout the country.
A Brighter Future
For a large part of 2014, home sales slumped in the United States, following a three-year rebound. Experts believe the only reasons for the slowdown were increasing home prices, tighter lending, and flat incomes. As a result, some people were unable to purchase homes but property values for current homeowners increased. Because of this, recovering or building equity becomes a more viable option. Increasing home prices also make refinancing qualification easier or getting a home sold opposed to it going into foreclosure.
According to CoreLogic, today roughly 1.5 million homes now have positive equity, which means the value is greater than what is owed on the mortgage loan However, there are still approximately 5 million homes that still have a negative equity. In other words, the value of these homes is less than what homeowners owe to the lender.
While there are still challenges to overcome, fewer foreclosures are a clear sign that the housing market is in full recovery mode. This not only prevents current homeowners from losing their property but opens doors for new buyers to become homeowners.