During the mid 2000s, the US housing market went through a very volatile time period. Leading up to 2006, the sub-prime mortgage industry issued millions of sub-prime mortgages, which led to a big increase in the demand for housing and ultimately the median value of a home increased as well. Once interests rose, and a lot of adjustable rate mortgages reset, millions of people suddenly were left with mortgage payments that were unaffordable and mortgage balances that were underwater. Thus the need for many Americans to sell house fast to cash investors.
This activity in the mid-2000s had a big impact on the rate of foreclosures in the United States. While the rate of foreclosed properties declined, those that follow the housing market and overall economy continue to keep an eye on changing trends. At this point in 2017, there are several foreclosure statistics that people need to be aware of.
Increased Foreclosures in May
During the month of May, the number of homes that were in the foreclosure process increased by 5% compared to April 2017. At the end of May, there were a total of 647,000 homes that were in some part of the foreclosure process. This includes homes that are actively bank owned, in default, or going through the auction process. While the number of foreclosures in May was higher than in April, it is still down by more than 20% compared to May 2016.
Steadily Increasing Sale Prices
Another factor to consider is that the median home price has increased and the discount available when buying foreclosed properties has declined. In May 2017, the median list price was $230,000 across the United States with a median sales price of $215,000. The 6.5% discount of sale price compared to list price is a decline compared to the prior year when it was closer to 8%. While the median price of a home in the county has increased by four percent year over year, the median price of a foreclosed property has increased by six percent. This shows that the discount available for foreclosed properties has declined in the past year, which could show that there is a higher demand from speculative investors.
Foreclosure Rates Higher in Certain Markets
Those that follow the real estate industry will also find that the rate of foreclosures in 2017 is higher in certain states, which are spread across the country. Overall, 1 in ever 1,620 homes in the United States is in the foreclosure process. The states with the highest concentration in the country right now are New Jersey (1 in 512), Delaware (1 in 742), and Maryland (1 in 997). Other states with high levels or foreclosure are Illinois and Nevada. The areas with the lowest levels of concentration are included in the northwest and include Montana, North Dakota, and South Dakota.
Improved Credit Availability
One of the reasons why the price of foreclosures has increased, despite the increased supply, is that there is now more credit availability than there was in prior years. Lenders are continuing to grow comfortable with the housing market and overall economy. This has made it easier for the average consumer to obtain financing for a foreclosed property.
Expected to Increase in the Future
While foreclosure rates are lower today than they have been in the past few years, the recent increase compared to the prior month makes it seem as if the rate will continue to rise in the future. There are a lot of different factors that will influence the rate of foreclosures including rising interest rates, increasing home prices compared to stagnating wages, and overall higher costs of living, which will make affordability more challenging.
In conclusion, the housing market is one of the most significant industry sectors in the United States. One of the biggest indicators of the housing market’s overall strength is the foreclosure rate. Those that follow the housing market and overall economy should be aware of a variety of 2017 foreclosure statistics.