Foreclosures fall to pre-housing bust levels
A healthier U.S. housing market and economy helped to winnow foreclosures in 2014 to levels not seen since before the housing bust.
The decline is the latest evidence of how foreclosures have diminished in recent years from a national crisis to a largely market-specific concern.
While foreclosures remain elevated in many populous metropolitan areas, such as New York, Philadelphia and San Diego, they have declined annually overall in recent years, and 2014 was no exception.
The number of homes repossessed by banks fell 29 percent last year to the lowest level since 2006, a year before the subprime mortgage crisis erupted, according to data released Thursday by foreclosure listing firm RealtyTrac Inc.
One reason for the drop: Fewer homes entered the foreclosure process last year.
Foreclosure starts tumbled 14 percent versus a year earlier to the lowest level since 2006, the firm said.
“Foreclosures are no longer a threat to home values nationwide,” said Daren Blomquist, a vice president at RealtyTrac.
All told, 643,193 U.S. homes entered the foreclosure process last year, according to RealtyTrac. That represents a 70 percent drop from their 2009 peak of about 2.14 million homes.
Completed foreclosures, or homes that were taken back by lenders, fell to 327,069. That’s down 69 percent from their peak of 1.05 million five years ago.
U.S. home sales slumped much of last year after a three-year rebound, held back by flat incomes, tight credit and rising home prices.
While the steady, albeit slower pickup in home values last year likely squeezed some potential buyers out of the market, it continued to lift property values for homeowners. When home prices rise, it can help homeowners build or recover equity, which can make it easier to qualify for refinancing or sell rather than ending up in foreclosure.
Nearly 1.5 million homes returned to positive equity — when a home is valued at more than what the owner owes on the mortgage — in the 12 months ended Sept. 30, according to CoreLogic. Some 5.1 million homes, or 10.3 percent of all homes with a mortgage, remained in negative equity — when the value of a home falls below what is owed on the mortgage — as of Sept. 30, the firm said.