Abundance of Foreclosed Homes in Market

January 15, 2012

foreclosed homesA new study by Urban Institute reported seriously delinquent mortgages have declined, but foreclosures are still burdensome on the recovering housing market.

Data from Foreclosure-Response.org. showed the delinquency rate dropped to 9.3 percent compared to December 2009’s 10.4 percent. The serious delinquency rate is measured in the U.S.’ largest 100 metropolitan areas as the amount of loans in foreclosure plus all loans more than 90 days in arrears.

One of the reasons for this decline is that delinquent loans dropped. From December 2009 to June 2011, the number fell 1.8 percent to 3.7 percent.

A problem arising from this is the inventory of foreclosed homes. Researchers are commenting that it could take decades to clear this inventory at the rates at which foreclosed homes are selling, slowly, and piling up, quickly.

However, states such as Florida  and Illinois underwent a markedly different change as their foreclosure rates climbed in their larger cities.  The foreclosure rate in Tampa, Fla., increased 2.8 percent. The percentage related to Chicago real estate grew 2.3 percent. Along with New York, both Florida and Illinois are judicial foreclosure states, meaning the court is forced to decide foreclosure. Urban Institute attributes this to the backlog of foreclosures.

While percentages of delinquent mortgages have gone down, there is evidence suggesting people might be less willing to even take one out in the first place. In each of the 100 metro areas surveyed in the study, mortgage originations were shown to have declined. First-time mortgages went down 39 percent in Buffalo, N.Y., during 2011. In Miami, new home loans dropped by an astonishing 82 percent, according to the Urban Institute report.

For more information on the report, its findings and what it could mean for your Chicago real estate, see this Housing Wire article.

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Stephanie is an Integrated Account Coordinator at Rountree Group Integrated Communications. She has public relations experience in public affairs, social media, blogging, healthcare, manufacturing, real estate, restauranting and retail.

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