Lower Percentage of Market, But Still Plenty of Foreclosures

In the third quarter of 2010, foreclosure properties made up around 30% of all residential real estate sales. In the same period in 2011, that percentage was down to 20%. However, it’s not a time for rejoicing. In the third quarter of 2011, 221,536 properties, down 11% from the previous quarter, and 5% lower than the same quarter a year earlier.

One reason this isn’t that joyous of a statistic is that foreclosures significantly slowed last year due to the robo-signing scandal, and there was a greater-than-normal seasonal drop-off in the fall. Fewer homes are coming through the process, but there is expected to be an increase in 2012. The average foreclosed home sold in 193 days, up from 172 days in the previous quarter and 161 days in the third quarter of 2010.

Though there is investor and normal buyer demand for these homes, banks are not just dumping them on the market. Instead to keep from depressing prices more, banks are slowly releasing them into the market.

Since the crisis began in earnest in 2007, the Administration has initiated numerous programs at great expense to taxpayers to infuse some life into the market. HAMP and HARP are two of those programs that were supposed to help up to 4 million homeowners to avoid foreclosure. However, after 4 years, only around 910,000 borrowers had benefitted from those programs.

More than 3.5 million borrowers remain behind in their mortgage payments, and more than 1.9 million homes are in foreclosure. Some analysts are still calling for the “writing-down” of loan principal balances, and say that doing this sooner would have helped a lot. They also say that this would reduce “strategic defaults” moving forward. These are when homeowners who can afford their mortgages walk away because they’re far under water, owing more than their homes are worth.