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The trend suggests that no locality is immune from what has become the leading cause of mortgage defaults, negative equity.

Negative Equity Drives Foreclosures into the Heartland

RealtyTrac_1-10.doc

The plague of foreclosures has spread in a big way into heartland states that did not experience soaring prices during the housing boom, were not major markets for subprime or alternative financing and are not areas of high unemployment.

The nation’s top ten foreclosure states now include Illinois, Utah, Idaho, Texas, New Jersey and Georgia, according to January data from RealtyTrac. In January, Montana and New Mexico led the nation in foreclosure growth.

The trend suggests that no locality is immune from what has become the leading cause of mortgage defaults, negative equity.

Nationwide, foreclosure filings are up 15 percent from a year ago and down five percent from December, a pattern similar to last year. Nevada, Arizona, California and Florida are still top the list of foreclosures but Illinois is now fourth for foreclosure filings-default notices, scheduled auctions and bank repossessions.

Texas and Illinois foreclosure filings have soared 25 percent since last year. With 2,603 filings, Idaho’s are up 72 percent. With one in every 231 housing units receiving a foreclosure filing, Utah registered the nation’s fifth highest state foreclosure rate. Georgia ranked tenth nationally, with one in every 351 homes receiving a foreclosure filing.

Montana and New Mexico led the nation in terms of year over year increase in foreclosures. Montana’s filings were up 708 percent and New Mexico’s, 681 percent, though both numbers that might change with improved data collection. Montana’s rate of one foreclosure for every 1,107 homes and New Mexico’s rate of one in every 680 homes are both well below the national average.

New Jersey’s 6,146 foreclosure filings made the top ten nationally. Its foreclosure rare of one in 572 units ranks 16 nationally.

All of these states have suffered significant declines in their average sales prices over the past two years. According to the latest state existing homes data released today by NAR, average sales prices since 2007 have fallen 16 percent in Georgia, 23 percent in Illinois, seven percent in Idaho, ten percent in Montana, 27 percent in New Mexico, 16 percent in New Jersey, 20 percent in Texas, and 26 percent in Utah.

Nationally RealtyTrac’s report on January foreclosure filings found a decrease of nearly 10 percent from the previous month but still 15 percent above the level reported in January 2009. The report also shows one in every 409 U.S. housing units received a foreclosure filing in January. More than 300,000 properties received foreclosure filings for the 11th straight month.

REO activity nationwide was down 5 percent from the previous month but still up 31 percent from January 2009; default notices were down 12 percent from the previous month but still up 4 percent from January 2009; and scheduled foreclosure auctions were down 11 percent from the previous month but still up 15 percent from January 2009.

For a copy of the RealtyTrac report, click on the link above.

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