Conor Dougherty | The Wall Street Journal |
“The number of foreclosed homes continues to fall across the country, which is helping the U.S. housing market creep back to normal.
There were some 48,000 foreclosures completed in August, down 35% from a year ago, according to a release by CoreLogic. At the same time the inventory of homes that aren’t for sale but are either in foreclosure or in severe financial distress—called the “shadow inventory” because the homes are likely to be listed for sale—is at 1.9 million, down by 22% from a year ago and the lowest level since August 2008.
The decline in foreclosures and shadow inventory is helping the housing market return to a more normal state in which homes are by and large sold by one homeowner to another with the help of a mortgage. Over the past year the market has been skewed by investors buying homes with cash, typically from banks or at courthouse auctions.
Of course, even a normal market has some number of foreclosures, and there was an average of about 21,000 completed foreclosures a month from 2000 to 2006, roughly half as many as in August. Foreclosures are improving fast, but they are still higher than normal.
“We’re only in the fifth inning,” said Sam Khater, deputy chief economist at CoreLogic.
CoreLogic’s report was just the latest housing market barometer to ask the question “Are we getting back to normal yet?” The answer, according to real-estate listings site Trulia, is that we’re getting close but aren’t there yet.
A typical real estate market, according to Trulia, is one that features neither the highs of the bubble years nor the lows of the recession and real-estate bust. In numerical terms, that means a delinquency and foreclosure rate of 5.25% (as defined by Lender Processing Services), 1.5 million housing starts a year and 5.5 million existing homes sold.
By that rationale, the housing market is about two thirds back to normal. Home sales are pretty much back, rising to 5.48 million in August, up 13% from a year ago, while delinquency, at 8.66% in August, is about 60% normal.
The big laggard is construction: August home starts were running at an 891,000 seasonally adjusted annual rate, about 40% back to normal.
More:
According to CoreLogic, the five states with the highest number of completed foreclosures for the 12 months ending in August 2013:”