Photo credit: Jeff Turner cc
Some Areas Are Not Out of the Woods Yet
Foreclosure activity in the U.S. has fallen to levels not seen since before the financial crisis started, according to a recent RealtyTrac report. The Midyear 2014 U.S. Foreclosure Market Report shows a total of 613,874 U.S. properties with foreclosure filings. This is a 19 percent decrease from the previous six months and down 23 percent from the first half of 2013.
Based on the March 2014 numbers of 315,895 properties in foreclosure; it’s estimated that the U.S. will see more than 630,000 foreclosures for the year. If this figure holds, it would represent a significant decline from the 747,728 foreclosures in 2013.
Ten states saw foreclosure activity drop to pre-August 2006 levels, among them are Arizona, Colorado, Georgia, Nevada, Tennessee and Texas.
“Nationwide foreclosure activity in June reached an important milestone, dropping to levels not seen since before the housing price bubble burst in August 2006,” said Daren Blomquist, Vice President at RealtyTrac. “Over the next six to nine months nationwide foreclosure numbers should start to flat line at consistently historically normal levels.
“There continue to be concerning trends in some states and local markets that clearly indicate those markets are not completely out of the woods when it comes to the lingering foreclosure problem left over from the housing bust,” Blomquist continued. “While it’s important that any remaining foreclosure infection is addressed promptly to keep it from festering, foreclosures are no longer a widespread contagion threatening to derail the housing market’s return to full health.”
While the numbers are looking better, it’s too early to celebrate.
Nine states showed foreclosure activity increases in the first half of 2014 compared to a year ago, including New Jersey, which had a 54 percent increase.
“There continue to be concerning trends in some states and local markets that clearly indicate those markets are not completely out of the woods when it comes to the lingering foreclosure problem left over from the housing bust. While it’s important that any remaining foreclosure infection is addressed promptly to keep it from festering, foreclosures are no longer a widespread contagion threatening to derail the housing market’s return to full health.”
Some of the decline in the number of foreclosures may also be attributed to mitigation programs and short sales. Then there’s the ‘Zombie’ foreclosure. This is where the delinquent homeowner is notified that a foreclosure is imminent. The homeowner then abandons the property. When the mortgage servicer determines that the cost to repair the home is more than what it’s worth, they may decide not to complete a foreclosure. This bank “walkaway” typically happens on low-value properties, but the borrower is still obligated to continue paying the mortgage, taxes and to maintain it. All of this adds to the burgeoning inventory problems; especially for affordable homes.
Michael Mahon, executive vice president/broker at HER Realtors, covering the Cincinnati, Columbus and Dayton, Ohio markets said, “Lenders are acting quickly regarding delinquent homeowners to determine if the property can be placed on the market for quick sale versus moving the home immediately into the foreclosure process. Low inventory levels and predicted increasing interest rates towards year end will create changes in housing affordability as we proceed into the second half of 2014, limiting options for some consumers.”
DS News. “Foreclosure Activity Falls below Pre-Crisis Levels” 24 July 2014. http://dsnews.com/news/07-17-2014/foreclosure-activity-falls-pre-crisis-levels
RealtyTrac. “U.S. Foreclosure Decreases 2 Percent in June to Lowest Level Since July 2006, Before Housing Bubble Burst” 24 July 2014.http://www.realtytrac.com/content/foreclosure-market-report/june-and-midyear-2014-us-foreclosure-market-report-8111