Foreclosure Starts Seek New Floor

by devteam September 18th, 2015 | Share

Foreclosure activity in the U.S.rndeclined on a year-over-year basis for the first time in six months.  RealtyTrac said today that there were a totalrnof 109,561 foreclosure filings (defaultrnnotices, scheduled auctions and bank repossessions or completed foreclosures) nationwidernin August.  This was a -12 percent changernfrom July and -6 percent from August 2014 and followed five consecutive monthsrnin which foreclosure filings exceeded those of a year earlier.  The filing rate equated to one in every 1,205rnU.S. households.</p

The decrease in filings camernmainly at the front end of the foreclosure process with foreclosure startsrnfalling to their lowest level since almost three years before the more or lessrnofficial start of the housing crisis. The 45,072 starts in August was a 1rnpercent reduction from the July number and 19 percent below a year earlier.  RealtyTrac said that, so far in 2015, foreclosure starts havernaveraged 49,362 per month, below the pre-crisis average of 52,279 per month inrn2005 and 2006.</p

Foreclosure starts decreased from arnyear ago in 30 states, including California (-29 percent year-over-year),rnFlorida (-40 percent), New Jersey (-38 percent), Texas (-17 percent), andrnMaryland (-26 percent). But as usual, improvements in foreclosure statisticsrnare geographically uneven and starts increased year-over-year in 19 states,rnincluding New York (+20 percent), Virginia (+16 percent), Missouri (+77 percent),rnand Massachusetts (+61 percent) and Minnesota (+20 percent).</p


“Foreclosure starts in August continuedrnto search for a new floor below even pre-recession levels, indicating thernhousing recovery of the past three years is built on a solid financingrnfoundation,” said Daren Blomquist, vice president at RealtyTrac. “But therncontinued rise in bank repossessions indicates more batches of bank-owned homesrnwill be rippling through the housing market over the next three to 12 months asrnlenders list these properties for sale.”</p

Filings at the end of the process, bankrnrepossessions, increased in 36 state and totaled 36,792 nationwide.  This was a 22 percent decline from thernprevious month but still up 40 percent from a year ago, the sixth consecutivernmonth with REOs increasing on a year-over-year basis. Bank repossessions inrnAugust were still well above their pre-crisis average of 23,119 per month inrn2005 and 2006, but well below their peak of 102,134 in September 2010.</p

Bank repossessions increased from arnyear ago in 36 states, including Florida (+23 percent), California (+31rnpercent), Texas (+168 percent), Ohio (+35 percent), and New Jersey (+295rnpercent).  They declined in 13 states, includingrnGeorgia (-55 percent), Illinois (-22 percent), Wisconsin (-7 percent),rnConnecticut (-36 percent), and Kentucky (-45 percent).</p

“This influx of bank-owned inventory</bmay be good news for an inventory-challenged housing market, but buyers andrninvestors interested in purchasing these bank-owned homes should understandrnthey tend to be lower-value properties in areas where house values have notrnrecovered as quickly and are more likely to have deferred maintenance issuesrnthat will need to be addressed," Blomquist noted. "The average estimated marketrnvalue of REO properties nationwide is now 33 percent below the average marketrnvalue of non-distressed properties, and homes that were repossessed in thernsecond quarter of this year on average had been languishing in the foreclosurernprocess for 629 days."    </p

A total of 41,308 U.S. properties werernscheduled for a future foreclosure auction in August, down 14 percent from thernprevious month and 19 percent from a year ago to the lowest level since Mayrn2006 – a more than nine-year low. This was about one-quarter of the peak forrnscheduled auctions in March 2010, but still above their pre-crisis average ofrn33,634 a month in 2005 and 2006. Despite the national decrease, scheduledrnforeclosure auctions increased from a year ago in 23 states, including NewrnJersey (+38 percent), Pennsylvania (+18 percent), New York (+64 percent), SouthrnCarolina (+ 38 percent), and Massachusetts (+ 21 percent).</p

Nevada, Maryland, and New Jersey remainrnthe most active states for foreclosure activity with Nevada experiencing a 233rnpercent jump in completed foreclosures over the last year.  This drove a 4 percent year-over-yearrnincrease in foreclosure filings, making it number one for foreclosure activityrnagain.  After holding that dubious honor forrnmost of the duration of the foreclosure crisis it dropped lower in the pack inrn2014 although remaining consistently in the top five.</p

Maryland’s overall foreclosure was unchangedrnfrom a year ago despite a 429 percent spike in bank repossessions, and thernstate posted the nation’s second highest foreclosure rate for the third monthrnin a row.</p

In New Jersey filings increased 3rnpercent from a year ago – driven largely by a 295 percent year-over-yearrnincrease in bank repossessions and 38 percent year-over-year increase inrnscheduled foreclosure auctions – and the state posted the nation’s thirdrnhighest foreclosure rate for the third month in a row.</p

Florida’s foreclosure rate dropped outrnof the top three highest among the states for the first time since June 2012rnthanks in part to a 33 percent year-over-year decrease in foreclosure activityrnin August to the lowest level since April 2007.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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