Bank-owned inventory shrinks in California
Inventories of bank-owned properties in California registered double-digit declines in July compared to a year ago, according to the latest numbers from data aggregator ForeclosureRadar.
Lenders took back 11,934 homes in July, an 18 percent decline from a year ago. That left them with an estimated 81,536 homes in their "real estate owned," or REO, inventories in July — 19 percent less than a year ago.
About three times that many homes are still working their way through the foreclosure process in California. But Sean O’Toole, ForeclosureRadar’s founder and CEO, said he sees "no evidence of a foreclosure wave anytime soon."
Lenders and government intervention continue to delay foreclosures, O’Toole said. Although that doesn’t provide a long-term solution for homeowners who owe more than their homes are worth, it does push back the day of reckoning.
"We continue to hear a lot of concern about a double dip for housing, combined with increasing concern that another wave of foreclosures is coming as well," O’Toole said. "While there is clearly a huge ‘shadow inventory’ of homes that are delinquent in their mortgage payments, those homes still have to go through the entire foreclosure process before hitting the market as REO listings."
In California, the foreclosure process takes a minimum of 120 days, and the average is currently about 226 days, up 20 percent from a year ago, O’Toole said. After repossessing a home, it takes lenders another 269 days on average to resell it, compared with 238 days a year ago, he said.
Foreclosure cancellations were up 75 percent in July from a year ago, to 18,942, as more borrowers were able to negotiate loan modifications or short sales. Lenders are also demonstrating an increasing willingness to sell properties on the courthouse steps instead of repossessing them.
While O’Toole said he’s not ruling out a double dip for housing, "at least in California it certainly won’t be caused by an excess supply of foreclosures anytime soon."
California and other "sand states" that experienced rapid price appreciation during the boom — including Florida, Arizona and Nevada — could lead a housing recovery, because they saw foreclosures surge before Rust Belt states like Michigan, Illinois and Ohio that are now being hit hard by both unemployment and foreclosures.
