Looking for a Recovering Housing Market? Check These Non-Judicial Foreclosure States

by on Foreclosures

Looking for a Recovering Housing Market? Check These Non-Judicial Foreclosure States

The nation’s housing market as a whole is recovering, but not all markets are following the same pace. In fact, some markets are recovering faster than others – and the common denominator seems to be states that have non-judicial foreclosure processes.

A look at recent data suggests that non-judicial foreclosure states are recovering faster than judicial foreclosure states. The cause is simple: more distressed properties are put back into the market in a non-judicial process than in a longer process that has to wind through backlogged court systems and take months, if not years, to resolve.

California is a prime example. California is a state that gives lenders an option to skip the courts when it comes to initiating foreclosure proceedings against a delinquent owner. California was also one of the states hit hardest by the real estate market crash.

Now, some of the best performing markets in the country are in California – places like Los Angeles and San Diego.

By contrast, some of the worst performing markets in the nation are in judicial foreclosure states like Florida, which boasts two markets – Tampa and Fort Myers – with the lowest rate of recovery.

How Non-Judicial Foreclosure Fuels Recovery

Non-judicial foreclosure contributes to faster real estate recovery because it takes properties that aren’t contributing to a healthy real estate cycle – homes with delinquent mortgages or homeowners in default – and putting them back into the market for purchase.

With a judicial foreclosure, this cycle can take years. New York boasts the longest pipeline, clocking in at just over 1,000 days – almost three years. This is why New York, Florida, and New Jersey are the three leading states when it comes to foreclosure inventory.

Prices also rebound faster in non-judicial foreclosure states. Case in point: prices rebounded by as much as 50% to 80% from rock-bottom prices in non-judicial states compared with 10% to 45% in judicial states.

Those looking to buy discounted homes in fast-growing markets, then, should look more to states with non-judicial foreclosure processes than judicial states.

With that being said, there is something to be said for looking in states with large amounts of foreclosures to look for properties that aren’t as competitive. Those three states are amongst the ones wich have an abundance of foreclosure properties that can help investors looking for ample opportunities and large inventories.

In any case, foreclosures can provide a path to affordable homeownership and smart investments – if you know where to look.