Calendar year 2013 is on track to end with the fewest foreclosures in a year since 2007. At the monthly average pace of foreclosures through July, the number of completed foreclosures is expected to reach nearly 490,000 by the end of 2013. That’s nearly 27 percent less than the number of foreclosures in 2012, and it would be the fewest foreclosures since 2007, when more than 400,000 homes were foreclosed on by banks.
Since foreclosures peaked in 2010 at 1.05 million, they have steadily declined. Experts attribute job growth, low mortgage interest rates, and a recovering housing market for the trend in declining foreclosures.
Even better news – the number of homes headed toward foreclosure is also declining. In July, lenders initiated the foreclosure process on just over 60,000 homes. That’s a 38 percent decrease from the same time last year, according to RealtyTrac.
In many states, foreclosure activity levels are at or below where they were before the housing crash. Simply put, it’s further evidence that the housing market has stabilized and the foreclosure problem in most markets is finally nearing an end.
What It Means For Homeowners
Clearly, the drop in foreclosure activity is good news as more people are getting to keep their homes, but what are some of the other benefits of this development? How does a decline in the number of foreclosures help the average person?
If you’re a homeowner, you should be elated by this news. For years, the high number of foreclosures has had a negative influence on home values. Numerous studies have shown that foreclosures cause local property values to decline. In fact, each foreclosure leads to a drop of around 1 percent in the worth of other homes in the area. The Center for Responsible Lending estimated that foreclosures cut home values by about $1.9 trillion from 2009-2012.
Why do foreclosures cause home values to decline? There are many reasons, including the fact that a foreclosed home will sell at a low price, thereby dragging down the value of other nearby homes; abandoned homes make neighborhoods less appealing; and abandoned foreclosures often attract vandalism and other crime activity.
Simply stated, if you own a home, rejoice. Foreclosures will have a diminished impact on the value of your home as this trend continues.
What It Means For Buyers
What does the decline in foreclosure activity mean for house hunters? The news might not be quite as bright if you’re looking to buy a home.
First, fewer foreclosures means fewer available homes on the market. With a limited selection, finding your dream home can prove more challenging.
Fewer available homes also means greater competition between buyers. Long gone are the days when you could sit back and wait for sellers to drop their prices to meet your budget. Now, we’re headed toward a seller’s market where homes are getting snatched up at a much quicker rate.
Of course, all of this means one thing – homes are being listed at higher prices than in recent years. With fewer foreclosures dragging down prices, a limited inventory of houses for sale, and a greater buyer demand than we’ve seen in years, it all adds up to higher listing prices.
Are you looking for a home in the Outer Banks? Coastal Outer Banks Realty can help you find the right home whether an investment, primary residence or second home. Visit www.coastalouterbanks.com today for more information!