IRVINE, CA—A recent increase in bank REOs shows that the US housing industry is still dealing with the distressed inventory from the last housing crisis, but the market is still on the path to health, RealtyTrac's VP Daren Blomquist tells GlobeSt.com. As we recently reported, according to the firm's most recent national foreclosure report, defaults, repossessions and auctions during 2015 were down 3% from 2014 and 62% from the peak in 2010, but bank repossessions increased in 2015 following four consecutive years of decreases. Some of the biggest increases in REOs were in New Jersey (up 226%), New York (up 194%), Texas (up 115%), North Carolina (up 108%), and Pennsylvania (up 61%). We spoke exclusively with Blomquist about this trend and what it means for the housing industry.
GlobeSt.com: What does the increase in bank REOs indicate about the housing industry today?
Blomquist: The increase in REOs indicates the US housing industry is still dealing with the long tail of distress from the last housing crisis. At the same time, given the relative strength of the housing market, we don't believe this increase in REOs will push the market off the path to health.
GlobeSt.com: Which group of buyers ends up taking possession of these homes from banks the most?
Blomquist: In most markets, these REOs are highly distressed homes that have been neglected for some time. That means the most likely buyers are real estate investors willing to take on problem properties.
GlobeSt.com: How do you expect REO numbers to trend moving forward?
Blomquist: I would expect to see continued elevated levels of REOs for at least the first half of 2016 before those numbers finally turn a corner and head lower, assuming no other big shock to the economy or housing market that would trigger a new wave of foreclosures.
GlobeSt.com: What else should our readers know about REOs?
Blomquist: While the recent rise in REOs are a burr in the saddle of the lending industry and most definitely are impacting individual local markets negatively, at the high level these are a blip on the radar of the housing recovery compared to the tsunami of REOs we saw back in 2009 and 2010.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
