Foreclosure Starts Hit Lowest Level in Over 10 Years

By Ryan Dosen

‘Tis the season for giving. Unless you’re a bank. If you’re a bank, you may give out some loans, but in that case you’re not truly giving anything away. And you may actually wind up being a Grinch and taking back some homes. The good news is that while banks aren’t exactly in the giving spirit, they are initiating foreclosures far less than they have been wont to do. RealtyTrac, a “leading source for comprehensive housing data,” just released its U.S. Foreclosure Market Report for November 2015 and the numbers are encouraging. While the actual number of homes being repossessed is up, the number of foreclosure starts has fallen to its lowest level in over 10 years. The steadily shrinking pace of foreclosure starts is yet another encouraging sign for the improving health of our real estate market.

RealtyTrac’s Foreclosure Market Report

According to RealtyTrac, foreclosure filings (default notices, scheduled auctions, and bank repossessions) were reported on 104,111 U.S. properties in November. This number represents a 10 percent month-over-month decrease and more than a 7 percent year-over-year decrease in foreclosure activity.

RealtyTrac says that “the 10 percent monthly decrease in overall foreclosure activity was caused largely by a 15 percent monthly drop in foreclosure starts, with 41,208 properties starting the foreclosure process for the first time in November.” This 15 percent drop left foreclosure starts at their lowest level since May 2005. RealtyTrac’s report also tells us that national foreclosure starts have now decreased year-over-year for 5 consecutive months, with monthly decreases in foreclosure starts occurring 7 times in the last 8 months.

It is interesting but not contradictory to note that while foreclosure starts are down, the actual number of homes being repossessed by banks is in fact up significantly. Bank repossessions were up 10 percent month-over-month in November and up 60 percent from a year ago. RealtyTrac says that November was the ninth consecutive month with a year-over-year increase in bank repossessions. We are also told that year-to-date completed foreclosures (410,249 in 2015) are actually up 35 percent compared to the same time period in 2014.

Daren Blomquist, VP of RealtyTrac, explains the diverging numbers by saying that “banks are continuing to work through the backlog of lingering foreclosures, pushing bank repossession numbers higher in the short term even as foreclosure starts drop to new lows.”

Focus on the Starts

On the surface, foreclosures are up and this might seem bad. But the sky isn’t falling. These are foreclosures that were started some time ago. As Blomquist said, this is the just banks working through their lingering backlog of bubble-era bad loans. More important than the homes that were taken last month is the fewer homes that will be taken in the months to come. Banks are starting the wheels turning on fewer and fewer foreclosures, which is a signal that the market continues getting healthier, that fewer people are going bad on their mortgages, and that there is legitimate reason for continued optimism about our real estate market.

– Ryan Dosen manages The Wayne Megill Real Estate Team of Keller Williams – Brandywine Valley in West Chester, PA. Contact Ryan Dosen to inquire about buyer or seller representation or to learn more about a career in real estate by emailing ryan@waynemegillteam.com or calling 610-399-0338.

This article was published by 21st Century Media and the Daily Local News (West Chester, PA). To read this article on the the newspaper’s site, please visit the Daily Local News.

Check out Ryan Dosen’s other 21st Century Media real estate columns.