Despite an increase in housing affordability, both first-time and repeat foreclosure starts reached 12-month highs in January, according to data released Monday by Black Knight Financial Services.
Repeat foreclosure starts were up 11% from December and comprised 51% of all starts, while first-time starts rose slightly by less than 1% to a yearly high, Black Knight said in its latest Mortgage Monitor Report. Housing affordability, meanwhile, also increased due to the continued low interest rate environment.
For foreclosures, a divide was seen between judicial and nonjudicial states. The former saw January starts jump 10% from December, while nonjudicial states only increased 1.7%. Judicial states also saw higher levels of new problem loans and loans 90 or more days delinquent.
"At the same time, foreclosure sale counts — essentially, completed foreclosures — have been decreasing more rapidly than the inventory of seriously delinquent loans in both judicial and nonjudicial states," said Trey Barnes, Black Knight's senior vice president of loan data products, in a press release accompanying the report.
"As a result, foreclosure pipeline ratios, the backlog in months of foreclosure and 90-day delinquent inventory based on current foreclosure sale rates, have been increasing across the board."
In judicial states, the pipeline ratio was at 58 months, and nonjudicial states are not too far behind at 53 months.
On a more positive note, Black Knight also reported a 1.41% decrease month-to-month in the total U.S. loan delinquency rate, which now stands at 5.56%. Additionally, the five states with the highest percentage of noncurrent loans were Mississippi, New Jersey, Louisiana, New York and Maine.
Housing affordability, measured as a ratio of fixed-rate mortgage payment on the median home price to the median monthly household income, stood at 21% — well above the low of 17.6% in October 2012 but still off the July 2006 high of 34.7%. The report added that home prices could increase 25% or interest rates could jump 2% before affordability returned to its pre-recession levels.
In terms of the least affordable housing markets, Washington, D.C., Hawaii and California came out on bottom having become less affordable than before the housing bubble, while another seven states are on the cusp of a similar shift.
