There was a time in California when foreclosures were so plentiful that patient home buyers could snag big bargains when purchasing used homes for sale in the Central Valley. Many so-called home buying gurus offered seminars on how to snag such properties for little or no money down. The normally lengthy waits to own foreclosures were considerably shortened as banks tried to get rid of large inventories of distressed homes.
Such times are long gone, according to the July 2016 National Foreclosure Report by CoreLogic, a real-estate industry tracker. In California, only 0.3 percent of all homes are in some kind of foreclosure, which represents a drop of 30.4 percent from the previous year.
- We’re tied for the lowest percentage with such states as Michigan, Colorado, Nebraska, and Nevada.
- The worst foreclosure rate was in New Jersey at 3.3 percent. Even then, that represents a 31.2 percent drop over a year.
- Nationwide, the rate runs 0.91 percent, a yearly drop of 29 percent. This number follows 57 months of consecutive annual declines.
The inventory of foreclosure properties in California also went down by 30 percent. Completed foreclosures went from 26,509 to 21,343 over the year, according to the Pasadena Star-News. A completed foreclosure is when a property is bought at auction by either the lender or a third-party, such as a flipper.
Much of these decline is due to the tightening of lending regulations brought about by the housing crisis, which reached its worst point in 2008. To prevent that fiasco from happening again, new rules and regulations have tightened the lending market and made it harder for potential homeowners to obtain financing. However, those buyers that do eventually get a mortgage are less likely to lose their homes through foreclosure.
Another major factor is the US Treasury’s Marking Home Affordable program which has contributed to the decline through permanent modifications, forbearance and foreclosure alternatives, which have assisted 2.5 million homeowners with first mortgages at risk of foreclosure since 2009, said Frank Nothaft, chief economist at CoreLogic.
The lower foreclosure rate reduces the inventory of homes overall, and specifically cheap homes. This contributes to an increase in home prices. The number of foreclosures will most likely continue to drop with the continuing reverse effect on the cost of housing. Interest rates set by the Federal Reserve can affect prices, but so far, the agency is holding steady on its numbers.
This should prove good news if you plan on selling a home that you already own. The longer you wait, the more valuable it becomes. The news isn’t so good if you’re looking for a used home. Inventory of those types of dwellings is low with many buyers competing for them. The longer you wait to buy, the higher the prices are likely to be when you start looking. When you finally decide to make an offer on a house, you may end up in a bidding war against multiple people looking at the same home. Out of frustration, you might settle for a home that isn’t quite what you want but is the only one that’s available.
You won’t suffer these indignities when you buy one of our new homes. We offer multiple floor plans, so you get exactly what you want without settling for second-best. Once you settle on a property, you’ll know what you’ll pay without worrying if you’re offer is acceptable or if you’re bidding against others. Why not check out our homes in person to see how one can work for you and your family. Contact us for an appointment.