What is the New Competition For Real Estate Now That REOs are Down?
Decreasing rates of foreclosures is a positive trend for home owners at large, but shifting trends result in a shifting reaction within the real estate market. The first result from the decreasing inventory was a beneficial growth in home prices across the board. The tighter inventory of a post REO flooded market has nearly run its course in controlling the market economists predict. In fact, CoreLogic goes so far as to say that home prices are stabilized enough to be back ‘on track’ in a way it has not been since 2006.
The stats are as follows:
- Foreclosures have fallen 20% from a year ago.
- From January to November of 2012, REOs dropped from 19.6%-11.5%.
Delinquencies are becoming rarer as banks opt for short sales/mortgage modifications over foreclosures. One big national trend within this larger narrative is that of the stark difference between judicial and non-judicial states. The only difference, judicial states must have their foreclosures go through the state’s court extending the timeline for a home to foreclose. Non-judicial states have clear their foreclosure pipeline whereas the judicial states are still trucking along.
“The foreclosure crisis has shifted east, to the judicial states, where the pipeline is slow,” says Khater. “The big driver in 2012 in prices increases [sic] was the decline in REOs, but I think the big move-down has already happened. The driving prices in 2013 will be the tighter inventory.”
Source: “Inventory Takes Center Stage as Foreclosures Fade,” The Wall Street Journal (Jan. 4, 2012)