This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Foreclosure Crisis Is in Last Inning

Stocks in this article: ^DJI XHB

NEW YORK (TheStreet) -- Will 2014 be the year when we finally can move on from the foreclosure crisis?

According to Daren Blomquist, vice president of RealtyTrac, there is strong evidence to suggest that foreclosures are no longer a threat to the housing recovery.

The latest foreclosure data suggested that the U.S. housing market is heading toward a more normal market, at least where distressed properties are concerned.

U.S foreclosure activity, which includes default notices, scheduled auctions and bank repossessions, declined 15% in November from the previous month, the biggest monthly drop since November 2010 when foreclosure activity plummeted following revelations of the robo-signing scandal.

Year over year, foreclosure activity was down 37%.

Foreclosure starts, referring to properties on which foreclosure action was initiated, declined 10% from a month ago to 52,826. That is the lowest level since December 2005.

"While some of the decrease in November can be attributed to seasonality, the depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed," said Blomquist in a press release. "While foreclosures will likely continue to stage a weak rally in certain markets next year as the last of the distress left over from the Great Recession is dealt with, it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold."

The unprecedented level of foreclosures in the wake of the housing bust drove home prices lower by more than 30% from their peak levels. In the hardest -hit areas, the decline was even steeper.

After hitting a peak in 2010, foreclosure activity has been on the decline for the past three years as banks pursued other alternatives such as loan modifications and short sales to resolve problem loans.

This was in part a response to government and regulatory pressure. But prolonged foreclosure timelines, onerous procedures and depressed home prices also made foreclosures the least attractive alternative.

Meanwhile, investor demand for foreclosed homes in recent years also has helped prop up the market. Investors, big and small, have aggressively bid for foreclosed homes. Some have flipped them for a profit but many professional investors have converted them into single-family rentals, helping to reduce the overhang of distressed homes in the market.

Some states, notably Florida, continue to suffer high rates of foreclosure. In judicial foreclosure states such as Florida, New York, New Jersey and Connecticut, the timeline to complete a foreclosure on a property stretches into years, which has created a backlog of foreclosure cases. Foreclosure activity tends to spike in these states month to month as problem loans work through the pipeline. But overall the trend is heading lower.

Additionally, mortgage delinquency rates are also falling and loans made post-crisis are of such pristine quality that the new problem loan rate is also very low.

Still, while foreclosure activity is moving toward normal, there are other indicators in housing that remain depressed. Construction starts and household formation are still well below normal.

In addition, in some regions housing affordability is once again becoming an issue, as incomes remain flat and mortgage rates rise. And most borrowers still have trouble getting a mortgage.

So not all is well with the housing market. But it is getting better.

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs