The steep decline in the number of REO properties in the last five years or so since the foreclosure crisis peaked has been one of the buzz topics in the mortgage industry. Just how many fewer REO properties are out there now compared to the total of REO properties at the peak of the crisis? According to the FHFA, Fannie Mae and Freddie Mac owned a combined total of slightly less than 73 thousand REO properties as of the end of the fourth quarter—less than a third of their peak total of slightly more than five years earlier.
In Q3 2010, Fannie Mae and Freddie Mac owned a combined total of approximately 242 thousand REO properties. Over-the-quarter, the number of REO properties owned by Fannie Mae and Freddie Mac declined by about 6 percent in Q4. Approximately 14 percent of the GSEs’ REO inventory in Q4 was located in Florida while about 19 percent of it was concentrated in four Midwestern states.
While many housing fundamentals have been nearing their pre-recession levels for months or even years in some cases, the nationwide homeownership rate sank to a 48-year low of 63 point 4 percent in the second quarter of 2015. According to one explanation from the St. Louis Fed, the sharp increase in homeownership during the 10-year period prior to 2004 played a role. Another explanation is that homeowership today is not as attractive as it has been in past decades because of fluctuations in home values.