Foreclosure pipeline in California said to be declining

In another positive sign for the housing market, the nation's so-called shadow inventory of properties in the foreclosure pipeline fell by more than 10 percent in July from the same period a year before, CoreLogic reported Tuesday.

The Irvine-based tracking firm said the number of housing units in jeopardy of foreclosure, or which have been repossessed by lenders but not yet listed for sale, dropped from 2.6 million in July 2011 to 2.3 million in July 2012.

"Broadly speaking, the shadow inventory continued to shrink in July," said Anand Nallathambi, president and CEO of CoreLogic. "This is yet another hopeful sign that the housing market is slowly healing."

The report should be welcome news for homeowners who are worried that the value of their homes could be further depressed by a wave of foreclosure sales.

The real estate market has generally been on a path toward recovery this year, with home prices pressed upward by the low inventory of homes on the market and record-low 30-year mortgage rates, which have fallen below 4 percent.

Experts have pointed to the shadow inventory as a potential threat to the fledgling upturn. Large numbers of foreclosed homes hitting the market could drive prices down.

Last year, a Bee analysis placed the region's shadow inventory at 53,256 homes in Sacramento, Yolo, Placer and El Dorado counties. That included about 12,285 homes owned by lenders but not yet sold.

So far, however, the next big wave of foreclosure sales has yet to materialize here.

Pat Shea, president of Lyon Real Estate, said Tuesday that he thinks the threat posed by the shadow inventory has been overstated.

"I really don't think in the Sacramento region there's a big shadow inventory," Shea said.

Reliable local data on shadow inventory are hard to come by, he said, but investors are quickly buying foreclosed homes even as the banks allow a greater number of short sales.

The improving economy and alternatives to foreclosure, including short sales and loan modifications, have helped prevent homes from becoming part of the shadow inventory.

Recently, foreclosures have accounted for about 14 percent of homes on the Sacramento-area market and short sales 36 percent, Shea said.

"I don't think we'll see a big increase" in the percentage of foreclosures on the market, he said.

CoreLogic said Tuesday that the amount of houses flowing into the foreclosure pipeline is roughly equal to the number of homes being sold as foreclosures or short sales, in which a lender takes less than what's owed.

The firm calculates the shadow inventory by adding the number of homes that are in foreclosure and those that are bank-owned but not yet for sale. Homes where owners are 90 days or more past due on their payments also are included.

All told, the shadow inventory in the United States was worth about $382 billion as of July, the firm estimated. That's down from $397 billion a year ago, it said.

Forty-five percent of all distressed properties are in five states: California, Florida, Illinois, New York and New Jersey, CoreLogic reported.

• Read more articles by Hudson Sangree

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