Data just out shows that last month’s foreclosure rate fell to a five year low. RealtyTrac reports that foreclosure filings, including default notices, scheduled auctions, and bank repossessions were down by 7% from August to 180,427 properties in September. That’s a drop of 16% year to year, and the lowest number of filings since September of 2007.
Since the mortgage settlement between the states and lenders was reached last April, financial analysts and economists have been waiting for a surge of foreclosures to hit the market. The dramatic slowdown in foreclosures resulting from the robo-signing scandal created a drop for a while. Once the settlement was reached, banks were expected to dramatically escalate their filings, but that hasn’t been the case up to now.
The flow of foreclosures has however been much more managed than anticipated. The decline in foreclosures in non-judicial states like California and Texas has been steep. Because non-judicial states mean faster foreclosure processes, there has been a clearing action going on from immediately after the settlement of the suit. Also, government and lender programs designed to keep borrowers in their homes and avoid foreclosure have accelerated as well.
Lenders are opting to refinance loans for many troubled homeowners and approving more short sales as well. Short sales generally mean that lenders save money, with lower costs and shorter clearing processes than those involved in full foreclosure. Record low mortgage rates are helping, as when an owner can get refinanced, their payments drop considerably.
With fewer foreclosures, cash buyers and investors have been scooping up inventory at a rapid pace. With most of the bargain basement priced homes going to investors, including bulk purchase deals, prices are being pushed up nationally. Nationwide, the median price of a new home was up by 17% over August a year ago. For existing homes, the rise has been 9.5%.
For investors there are still bargains, but they’re getting harder to locate and there’s competition for them.