The foreclosure forecast for 2014 reflects the housing market’s continued slow but steady crawl toward recovery, with fewer homes expected to end up in foreclosure or short sale situations.
As 2013 drew to a close, real estate market forecasters from coast to coast were making bold predictions of an anticipated marked decrease in distressed properties. The first couple of months of 2014 would seem to support those assumptions.
U.S. foreclosure filings in February dropped to the lowest level experienced in over seven years, a figure 10 percent lower than the month prior.
Foreclosure numbers have continued to follow a downward trend since peaking in 2010 at 1.05 million.
There were a reported 112,498 foreclosure filings in February, including default notices, repossessions, and auctions, a 27 percent drop from the previous year and the lowest point since December 2006.
So-called “zombie” or “ghost” foreclosures are measured separately. These are homes that have simply been vacated by the owners, a category that topped the 152,000 earlier this year. Surprisingly, despite measurable economic recovery, this figure has remained relatively flat compared with the third quarter of 2013, the point at which it was last measured.
The wildcard in the whole foreclosure game is the number of properties still lingering on the edge of foreclosure, begging the question of which way they will tip. Much like foreclosed properties, these “properties in limbo” can depress the value of surrounding homes and contribute to a cloud of uncertainty hanging over communities that might otherwise have made it further down the path of recovery.
Despite the positive signs, it is still too early in the game to consider the housing market back to “normal,” however you might define “normal” these days. But the market is clearly continuing its steady pace in the right direction as appreciation moderates, negative equity situations begin to right themselves, and foreclosures slow.
Distressed properties are still contributing to the national supply of available homes, but foreclosure filings are clearly falling. Improvements in the economy have meant fewer homeowners losing their homes and more lenders agreeing to short sales. Meanwhile, the recovery has meant home prices, along with home equity, continue to rise.
For prospective home buyers hoping to scoop up a deal, the reality is the once robust foreclose market has greatly slowed, a trend expected to continue. But that doesn’t mean there still aren’t opportunities available in foreclosure and short sales.
Despite national foreclosure figures hitting historic lows, 10 states still saw foreclosures increase last year:
In addition, scheduled foreclosure auctions in judicial process states reportedly reached the highest levels in three years.
Bottom line: foreclosure sales are likely to play a diminishing role in the housing market in 2014, with continued year-over-year decreases on the horizon. Foreclosure starts continue to track downward as well.
However, for some prospective home owners and real estate investors, the foreclosure and short sale market will continue to offer some opportunities, as it did prior to the bursting of the housing market bubble.