The overhang of pending foreclosures dropped to a four-year low in January as housing demand increased and fewer borrowers were late with mortgage payments, according to CoreLogic Inc.
The so-called shadow inventory -- homes that are seriously delinquent, in the foreclosure process or owned by banks and not listed for sale -- fell 18 percent from a year earlier to about 2.2 million homes, the Irvine, California-based real estate data company reported today. That’s the lowest level since December 2008 and down from the peak of 3 million homes in the first month of 2010, according to CoreLogic.
The improving economy and a surge in home purchases by investors are keeping distressed properties off the market as housing rebounds from a five-year slump. The overhang is disappearing fastest in western states such as Arizona and California, where banks don’t need court approval to seize properties. It can take years to foreclose on homes in judicial states such as Florida, New York and New Jersey.
“The shadow inventory is declining as properties are moving through the distressed pipeline,” Mark Fleming, chief economist for CoreLogic, said in a statement. “States like Arizona, California and Colorado are experiencing significant declines year over year in the stock of serious delinquencies, a positive sign for further improvement.”
Arizona had a 40 percent decline in serious delinquencies in January from a year earlier, more than any other state, followed by California, Colorado, Michigan and Wyoming, CoreLogic said.
Seriously delinquent U.S. mortgages fell to the lowest level since 2008 in the fourth quarter as job growth and recovering housing demand enabled struggling borrowers to sell without losing money, the Mortgage Bankers Association said on Feb. 21.
Home repossessions tumbled 29 percent last month from a year earlier to the fewest since September 2007, according to RealtyTrac, an Irvine, California-based data company.