Summary: Many buyers look to foreclosures in an effort to get a deal when buying…
Summary: There’s some good news on the national real estate front: foreclosures are down. In fact, they recently hit a record low. We’ll go into more detail about this trend in this article.
According to a recent ATTOM Data Solutions report, foreclosure filings hit their lowest number since the company started tracking them. The data from ATTOM’s U.S. Foreclosure Market Report suggests that the housing boom is continuing.
That said, the current foreclosure situation may also be influenced by the ongoing coronavirus pandemic. Many Seattle mortgage lenders have deferred mortgages and halted foreclosure proceedings for now, so today’s numbers might be a reflection of the current situation. Foreclosure numbers will probably continue to decline throughout 2020.
Foreclosures Drop to Record Lows
Property repossessions dropped 8% in February 2020 to 10,469 from the same month last year (though up 1% from January 2020), marking the second consecutive yearly decrease in completed foreclosures on record. One out of every 2,841 properties had a foreclosure filing in February.
Foreclosures also saw the biggest drop in foreclosures in 2019, marking a 15-year low, according to ATTOM. The 493,066 reported foreclosures in 2019 was a 21% decrease from 2018 and a whopping 83% drop from the peak of almost 2.9 million in 2010, just after the Great Recession.
What is Foreclosure?
Foreclosure is process whereby a lender repossesses a property after a homeowner is unable to pay their mortgage and defaults on the home loan. When a borrower misses a mortgage payment, the mortgage becomes delinquent. This is the point at which the foreclosure process starts.
The lender will notify the homeowner in default, and three to six months after the first missed mortgage payment, the lender will start to foreclose (as long as the borrower has not made up those payments within a certain grace period and the mortgage is still delinquent).
Buyers Should Be Careful When Buying Foreclosures
Homebuyers often look to foreclosures in an effort to get a good deal on a home purchase. Houses bought while in stages of foreclosure can usually be purchased at a lower price, which is one reason why foreclosed homes equal 25% of all home re-sales. But with fewer foreclosures being recorded, there aren’t as many good deals to be had in this department.
However, just because a foreclosed home cost less to purchase does not mean that it will save you money in the long-run. Foreclosed houses are usually sold as-is and can be in much less than perfect shape. Fixing up a foreclosed home may cost you more than you bargained for and you may find a better deal in another home elsewhere.
The process of buying a foreclosed home is different than other homes, so be sure to consult an expert before purchasing.
Related: How to Avoid Foreclosure
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