Homeowners don’t like to see abandoned houses on their block. Zombie foreclosures—vacated homes that have yet to complete the foreclosure process—can be more than an eyesore. They may also attract crime and lower surrounding home prices.
If you’re shopping for a mortgage loan and a home, there’s good news on this front. Foreclosure rates are falling fast.
What New Data Reveal
Fresh numbers from ATTOM Data Solutions show that foreclosure activity nationally plunged to a 10-year low in 2016. Looking closer, U.S. foreclosure rates dropped by 30 percent last year.
That’s the most improvement of any year on record, according to Black Knight Financial Services. December 2016’s 59,700 foreclosure starts marked an amazing 24 percent decrease from the same period a year earlier.
Foreclosure filings surpassed 2.8 million in 2010. Last year, they tallied 933,045. That’s a sign that the housing market is in much better shape today than a few years ago.
Why Foreclosures Are Down
Daren Blomquist, senior vice president for ATTOM Data Solutions, says foreclosure filings are down for two reasons.
First, since the last housing bubble, there are fewer “legacy” foreclosures—meaning homes in the foreclosure process with loans originated between 2004 and 2008.
“Most legacy foreclosures have either been already foreclosed on or resolved in some other way, such as refinancing, modification or short sale,” says Blomquist.
Second, “loans originated over the past seven years are holding up well, with default rates below historically normal levels,” he adds.
How The Housing Market Benefits
Lower foreclosure rates are a positive for real estate, both nationally and in local markets.
“It’s good news that the market in most areas is not dealing with the uncertainty of a high share of distressed properties competing with regular sales,” notes Blomquist.
“This leads to a healthier and normal real estate ecosystem. Home prices are steadily rising over the long-term, and home builders are more confident to create extra supply without fear of having to compete with foreclosures.”
Ultimately, that should help restore balance to the supply-demand equation, he says.