Often, people who owe more on their mortgages than their homes are worth just walk away from loan obligations, throwing more properties into foreclosure. “The underwater loans are a big potential problem,” said Blomquist.
But other economists say there are enough positive signs — including slowly rising home prices, decreasing inventories of homes on the market, increasing construction starts, and falling delinquency rates — to think the foreclosure situation will continue to improve into next year.
“Though we still have a long way to go, I think this recovery is sustainable,” said Patrick Newport, an economist at IHS Global Insight in Lexington. “Barring another recession, things should keep improving.”