Foreclosure rates finally drop to 2008 levels
Graphic courtesy of The Wall Street Journal
Good news: Home foreclosure rates are way down compared to the last couple of years, a sign that stricter lending standards have done their job to only allow mortgage loans to properly qualified candidates.
Decreased foreclosure rates also reflect a sharp increase in home values in 2012 and 2013 and dropping unemployment rates. Fewer homeowners are now "underwater" on their mortgage thanks to higher home values, and more people have jobs today than a few years ago.
It may be tempting to complain that the refinance process takes longer than it did in 2008 and that lenders' new requirements are too stringent. However, these restrictions appear to at least be effective in minimizing the numbers of people getting loans who can't afford to pay them back. Lenders have less risk of borrowers falling delinquent on loans when lending standards are higher.
Bad news: Home sales in January were down, partially due to unusually cold weather, slightly higher interest rates and a smaller supply. This is likely only a seasonal loss, though: Most analysts predict a sales bounce back by springtime as the weather warms up and buyers are eager to see what's on the block.
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