According to a report released by CoreLogic, the national foreclosure inventory faced a 35% decrease in June 2014 to reach an approximate number of 648,000 homes. Currently, the foreclosure inventory makes up 1.7% of all mortgaged homes. In June 2013, the numbers were at 998,000, making up 2.5% of the total number of homes with mortgages.
The Effect of Foreclosures on a Community
In the past, increasing foreclosure numbers increased the likelihood for a neighborhood to have at least one foreclosure. It is a known fact that high foreclosure rates can weaken home prices and put other sellers in those neighborhoods in a difficult position by reducing the value of homes in the same community. Despite the great condition that foreclosed houses may be in, the decreased prices are a result of the buyers’ negative perception of the specific neighborhood.
In some cases, foreclosures are handled quickly and quietly. However, some foreclosed homes end up plastered with ‘bank owned’ signs while even being boarded up. Additionally, as financial trouble strikes a home owner with a mortgage, the general condition of the houses may also decline. This will result in a steep drop in curb appeal for the foreclosed home as well as the properties around it.
In April 2008, foreclosure inventory saw a peak high of 88%. The current rate is the result of 32 months of steady decline that includes a stretch of 17 months where a decline greater than 20% was achieved. With low foreclosure rates, the possibility of living next to a foreclosed property is rather low. This means that neighborhoods will portray a happy, family friendly environment with well-kept lawns and occupied homes – thus increasing property value. As for prestigious neighborhoods with high priced properties, not having a foreclosure taint the neighborhood’s appeal is always an advantage for those who wish to sell their homes. As mentioned earlier, the more foreclosures a neighborhood or city may have, the less attractive it is to a buyer. With each foreclosed property, the positive appeal of a neighborhood can decline while it will continue to decline for as long as the foreclosure is kept on the market.
As of June, pre-foreclosure filings have also seen a decline of 68% from March, 2009 where a record peak of 229,000 was reported. In comparison, monthly filings were at an average at 21,000 between 2003 and 2005 before the financial crisis started. With all 50 states as well as the District of Columbia, reporting foreclosure inventory declined by 25% from last year, home sellers are provided with a great opportunity to take full advantage of the benefits offered by their neighborhoods and to set a lucrative price for their properties.
As for Florida, the foreclosure rate shows an impressive 4.2% point decline in comparison to the 0.6 in New Jersey and New York. It is evident that Florida has seen significant improvements in foreclosure rates and therefore allows sellers to put their properties on the market with greater reassurance of making profitable sales while buyers are assured of value for their money. Frankel Realty can guide you on your journey to find your next home or investment property, call us on (561) 427 2154.