According to Trans-Union credit reporting agency, Mortgages 60 or more days late dropped from 5.49% to 5.41% in the last quarter. A year ago, they were 5.88%, so Nationally, an 8% reduction in a year.
BUT, in Arizona (and California) the drop was much more extreme. Arizona dropped from 7.46% Q3 2011 to 5.62% That is a fairly stunning improvement for just one year, and goes a long way to putting to rest any fantasy theories of shadow inventory coming to market. Several factors in play are likely to sustain this rapid decline in late mortgages going forward:
1. Increasing home values raise some owners to positive equity, drastically lowering their odds of foreclosure.
2. Harp.x refinancing for owners means many people will be paying lower payments, in many cases less than equivalent rent with today’s super low interest rates. This too serves as a disincentive to let the home go.
3. Gradually improving economy. revisions to employment numbers have come in, showing the economy has added an average of 177,000 jobs over the past three months. Not stellar, but certainly small positive signs never the less.
The number of homes actually still in the Maricopa county foreclosure pipeline took a big drop in October, according to foreclosureradar.com
Notice in the second graph, Oct 2012 has approximately a total of 23,000 distressed property in the pipeline, compared to 35,500 a year ago. It bears thinking about, that the Phoenix market managed a price increase of roughly 20 to 30% on average, while reducing pending foreclosures by 12,500.
This reduction of distressed inventory has actually accelerated at the end of the year, and would leave Phoenix with no distressed inventory in roughly a year and a half. [Even postulating another year or so to handle legacy short sales that aren’t in default, as anyone can see, all the data points to the very worst factors of the past six years disappearing from the Phoenix market in the very near future]