CoreLogic, in their most recent foreclosure report, revealed that approximately 1.3 million homes, or 3.2 percent of all homes with a mortgage, were in the national foreclosure inventory as of August 2012 compared to 1.4 million, or 3.4 percent, in August 2011. Month-over-month, the national foreclosure inventory was unchanged from July 2012 to August 2012.
CoreLogic identifies foreclosure inventory as “the share of all mortgaged homes in any stage of the foreclosure process”. Their report revealed that 32 of the 50 states have seen their percentage of foreclosure inventory decrease compared to last year. Though foreclosure inventory is slowly shrinking nationally, some states are headed in the opposite direction.
The four states with the highest foreclosure inventory as a percentage of all mortgaged homes according to CoreLogic:
- Florida – 11%
- New Jersey – 6.5 %
- New York – 5.2%
- Illinois – 4.8 %
These numbers coincide with those reported by LPS in the recent Mortgage Monitor which revealed that foreclosure starts in judicial states increased by 21% month-over-month while decreasing by 3% in non-judicial states. All the states listed above are judicial states.
LPS ranked states by how long it would take to clear their shadow inventory at that states’ current sales pace for foreclosed properties. Using that measure, New York and New Jersey have a much larger pipeline of distressed properties than any other state. (Florida and Illinois are not on this list because they are clearing their distressed properties at a much faster pace. Their pipeline is shrinking more rapidly).
These facts caused Mark Zandi, chief economist of Moody’s Analytics, to report:
“Shadow inventory is falling in much of the country –except for the Northeast. The implication is that house prices will be much weaker in the Northeast in coming years as these distressed properties eventually get sold.”
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