Bubble-Era Loans Still Represent Two-Thirds of U.S.Foreclosure Inventory

Last year in this space I shared some findings from analysis of RealtyTrac foreclosure data showing that 75 percent of all loans in foreclosure at the time were originated between 2004 and 2008 — demonstrating the lingering effects of the bad loans that triggered the foreclosure crisis even as new foreclosure activity had dropped to a six-year low.

Now new foreclosure activity — foreclosure starts — have dropped to a more than eight-year low, according to RealtyTrac’s June 2014 U.S. Foreclosure Market Report. They are in effect back to normal levels they were at before the housing bubble burst in late 2006.

However, at the risk of sounding a bit boastful, as I predicted in the post last year the share of distressed sales is still well above normal even as foreclosure starts have returned to normal levels. In the first quarter of 2014, distressed sales — including short sales, sales of property at the foreclosure auction and sales of bank-owned properties — accounted for 14.3 percent of all residential sales in May, according to the latest RealtyTrac Residential & Foreclosure Sales Report. While that share of distressed sales was down from 15.6 percent in the previous month and down from 15.9 percent of all sales a year ago, it is still far above the pre-housing crisis level, consistently below 5 percent.

Read on.

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