Homes classified as “shadow inventory” fell to 2.3 million units in October, down 12.3 percent from a year ago but still representing a seven-month supply of homes, according to a monthly report from real estate data firm CoreLogic.

Homes with seriously delinquent loans attached to them made up 1.04 million of October’s shadow inventory. The balance included 903,000 homes in some stage of the foreclosure process and 354,000 bank-owned properties.

Shadow inventory refers to the number of distressed homes likely to hit the market soon, but which aren’t yet listed for sale in a multiple listing service or included in traditional pending supply metrics.

October’s shadow inventory tally represents 85 percent of the total 2.7 million homes identified by CoreLogic as having seriously delinquent loans, in the foreclosure proces or “real estate-owned” (REO). Seriously delinquent loans are defined as those overdue by 90 days or more.

“We expect a gradual and progressive contraction in the shadow inventory in 2013 as investors continue to snap up foreclosed and REO properties and the broader recovery in housing market fundamentals takes hold,” said Anand Nallathambi, president and CEO of CoreLogic, in a statement.

Given that a significant portion of the shadow inventory has not entered the foreclosure process, it won’t have too large an effect in the coming months because of long foreclosure timelines in many states, said Mark Fleming, CoreLogic’s chief economist.

The value of the shadow inventory in October was $376 billion, a 5.8 percent drop from October 2011.

The five states where serious delinquencies declined the most in the three months ending in October 2012 were Arizona (13.3 percent), California (9.7 percent), Michigan (6.8 percent), Colorado (6.8 percent) and Wyoming (5.9 percent).

In October, 45 percent of all 2.7 million distressed properties in the U.S. were concentrated in five states: Florida, California, Illinois, New York and New Jersey.
 

Buyers closed on nearly 1800 houses in King County last month, 13% more than September 2011.  The median price of single family homes sold has been in the $375,000 to $380,000 range since June Distressed home listings (short sales & bank owned) are down 60% from last year.  The real estate tide has changed and the feeling of confidence has returned to Seattle!
There are more buyers than sellers currently in the market and inventory hasn’t been this scarce since at least 2000.  Buyers are looking again, lured back to the market by record-low morgtage interest rates, rising rents and home prices that appear to have stabilized.   Thinking of selling or buying?  Now is the time!

Did you know…The median price of single family homes sold in June 2012 in King County was $380,000, up 10.4% from June 2011.  The 1st double digit increase in nearly 5 years!  Distressed home listings (short sales & bank owned) are down 60% from last year.  The tide has changed and the feeling of confidence has returned to Seattle!

This week’s reports show that January New Home starts rose to the highest level since October 2008 and Weekly Jobless Claims fell to the lowest level since March 2008! Are we out of the woods? What do you think?

FHA rates this morning are back down to 3.75% with no points!!!

With a small seller credit towards non recurring closing costs and pre paid items, buyers can get into a home for basically the 3.5% down payment alone!

So for someone purchasing a $225000 home the $7875 down payment (which can be all gift from a relative) would really be all they need to move into the home!

The Principal & Interest payment a $225K purchase price would be $1015 per month!  The additional Mortgage Insurance would be approximately $200 per month,  STILL lower than a lot of people pay for montly RENT!

Wow! Check out the FHA 30 year fixed rate this week…its at a new record low of 3.5%!!!
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
Bonds and home loan rates are continuing their improving trend. I’ll be watching this closely as we head further into the new year. This is still a great time to buy a home or investment property.

So what were the results of the EU Summit? Leaders agreed to a new, tighter “fiscal integration” across the Eurozone. This means that a new treaty will be drafted, setting guidelines such as annual budget deficits being limited to 3% and failure to meet guidelines like these would automatically spark disciplinary procedures. As expected, Germany was the winner in the negotiations as they demanded a tighter fiscal union in lieu of firing up the printing press and buying troubled sovereign debt. So what does all of this mean for home loan rates here in the US? It’s important to remember that when our economy is struggling and economic reports are less favorable, our Bond Market usually benefits as the investors seek a safe haven for their money. Since home loan rates are tied directly to Mortgage Bonds, our home loan rates are sometimes at their best when our economy is struggling. In a way it makes sense…in times of economic struggle, good home loan rates can help kick start our economy in other areas. Though our economic reports have been improving of late, the Bond markets – and therefore home loan rates – have continued to benefit from the uncertainty in Europe, as investors have been staying put in the relative safe haven of US Bonds ! That’s why now remains a great time to nuy a home or investment property with home loan rates still near historic lows.

Great news, yesterday FHA’s loan limit was restored to $567,500 from the current $506,000.
As of today the lenders are still in the process of updating their systems to allow for the higher loan amounts. I imagine we should see these changes in the coming weeks.

What does this mean for you ??  Buyer’s can purchase a home up to $588,000 with just a 3.5% down payment.  Seller’s listing their homes in the $500K-$600K range have a larger pool of potential Buyers !