It’s a new year and the US housing market is looking comparatively brighter this year. It has been eight years since the housing market crashed and foreclosures skyrocketed, but in 2016, we will see the foreclosure wave decrease along with the return of a more “normal” real estate market.
The continuous downward trend in stressful dynamics will help complete a paradigm shift in the lending industry in 2016 – the emergence, of which is already obvious. The focus of the industry will shift away from reducing and containing the risk lingering from the last housing boom and will head toward expanding access to credit in an effort to maintain force in the housing boom of today.
2015 foreclosure overview
For lenders and services, notable gains were made in reducing the foreclosure stock in 2015. Improvement in mortgage delinquencies occurred disproportionately in non-judicial states, such as Arizona, California and Georgia, where foreclosures were auctioned off quickly outside of the courts – while judicial states, including New York, New Jersey and Florida, struggled to flush out the foreclosure pipeline, which was clogged by lengthy judicial reviews, proactive legislation and unusually long foreclosure timelines.
Length of time to foreclose at record high
Properties repossessed by lenders in the third quarter had been in the foreclosure process an average of 630 days – the longest since RealtyTrac began tracking the process in 2007. The foreclosure process increased year-over-year in 28 states. Additionally, the number of bank repossessions, or real estate owned properties (REOs), jumped 66% from a year ago – an indication that a backlog of bank-owned homes held up by various legislative and legal delays is finally spilling over the dam, and many of these homes will be hitting the market for sale in the next six to 12 months.