Foreclosure Inventories at Record High and Increasing

By Kyle Chezum Updated on 5/3/2011

 

It's not news to point out the recent increases in foreclosure inventory.  As industry professionals and consumers alike have noted, the past several months have brought a massive shadow inventory of foreclosed homes and delinquent properties to the residential real estate marketplace.  But a report released by Lender Processing Services shows that the number of homes in foreclosure has reached an all time high.

LPS confirmed that by the end of March, the national inventory of foreclosed homes had reached the 2.2 million mark.  Never in history have there been this many foreclosed home available in the market or, as the case may be, unavailable—many banks have chosen to keep a large portion of the homes they now legally own out of the marketplace.

More importantly, foreclosure starts increased 33% during the month, meaning there will likely be an equally high number of newly foreclosed homes available throughout the rest of the spring months as well.

That said, there are some good points to this.  First, delinquencies have continued to decreases, meaning the nation may be seeing the end of the foreclosure crisis with this final surge of foreclosed homes.  Second, the only way out is up.  Once homes have been foreclosed on, they can be sent to market and sold to new buyers, which hypothetically gets the real estate market moving again.  It won't happen soon and it won't be easy, but the foreclosure activity is a necessary first step.