Not since Santa Claus visited the George W. Bush White House has the total of properties with foreclosure filings–default notices, scheduled auctions and bank repossessions – reached a level as low as they did last month.
RealtyTrac reported last week that 0.61 percent of all U.S. housing units (one in 164) had at least one foreclosure filing in the first six months of the year. A total of 127,790 U.S. properties had foreclosure filings in June, down 14 percent from the previous month and down 35 percent from a year ago to the lowest monthly level since December 2006 Filings in the first half of the year totaled 801,359, representing a 19 percent decrease from the previous six months and a fall of 23 percent from the first half of 2012.
For a little perspective, here’s an excerpt from Freddie Mac’s economic outlook in December 2006:
“The recovery, however, will not be a re-run of the white-hot market in 2004-2005. Rather, there will likely be a return to more “normal” conditions next year, with starts and sales picking up only gradually and then growing at a modest pace. Nationally, house prices will likely appreciate around the rate of consumer price inflation, although there is a potential for real declines and some hard-hit areas will need greater improvements in the local economy before experiencing a housing recovery. With smaller price gains and reduced opportunities to extract equity, mortgage debt will grow more slowly. In short, housing markets will move off center stage, but will resume quietly providing homes and opportunities to build a nest egg for millions of American households.”
Things didn’t work out as planned. Six years later, some 4.3 million nest eggs were lost to foreclosure and homeowners have lost $3 trillion in equity but at long last the recovery has begun and housing is back on center stage.
High-level findings from the report:
- U.S. foreclosure starts in June dropped 21 percent from the previous month and were down 45 percent from a year ago to the lowest monthly level since December 2005 – a seven and a half year low. Year to date through June, 409,491 foreclosure starts have been filed nationwide, on pace to reach more than 800,000 for the year, which would be down from 1.1 million foreclosure starts in 2012.
- Foreclosure starts in June decreased from the previous month in 38 states, including Nevada (down 84 percent), Colorado (down 62 percent), New Jersey (down 40 percent), Illinois (down 39 percent) and Florida (down 26 percent).
- Bank repossessions (REO) in June decreased 9 percent from the previous month and were down 35 percent from a year ago. Year to date through June, a total of 248,538 bank repossessions have occurred nationwide, on pace for nearly 500,000 for the year, which would be down from more than 671,000 in 2012.
- Bank repossessions in June decreased from a year ago in 34 states, but there were some notable exceptions where bank repossessions were up from a year ago, including Arkansas (up 143 percent), Oklahoma (up 103 percent), Maryland (up 74 percent), Washington (up 71 percent), New Jersey (up 33 percent), and New York (up 21 percent).
- Judicial foreclosure auctions (NFS) were scheduled for 28,296 U.S. properties in June, up less than 1 percent from May but up 34 percent from June 2012. States with substantial annual increases in scheduled judicial foreclosure auctions included New Jersey (up 103 percent), Florida (up 100 percent), Maryland (up 94 percent), New York (up 66 percent), and Illinois (up 65 percent to a 35-month high).
- Florida, Nevada, Illinois, Ohio and Georgia posted the top five state foreclosure rates for the first half of the year, while five Florida cities posted the top five metro foreclosure rates: Miami, Orlando, Jacksonville, Ocala, and Tampa.
“Halfway through 2013 it is becoming increasingly evident that while foreclosures are no longer a problem nationally they continue to be a thorn in the side of several state and local markets, particularly where a backlog of delayed distress has built up thanks to a lengthy foreclosure process,” said Daren Blomquist, vice president at RealtyTrac. “The increases in judicial foreclosure auctions demonstrate that these delayed foreclosure cases are now being moved more quickly through to foreclosure completion. Given the rising home prices in most of these markets, it is an opportune time for lenders to dispose of these distressed properties, either at the foreclosure auction to a third-party buyer, or by repossessing the property at the auction and subsequently selling it as a bank-owned home.
Florida, Nevada, Illinois post top state foreclosure rates in first half of 2013
Florida posted the nation’s highest state foreclosure rate in the first half of the year: 1.74 percent of housing units with a foreclosure filing (one in every 58) during the six-month period – nearly three times the national average. A total of 155,264 Florida properties had a foreclosure filing in the first six months of the year, the most of any state and up 12 percent from a year ago. In June Florida foreclosure starts (LIS) decreased 23 percent from a year ago but scheduled foreclosure auctions increased 100 percent and bank repossessions increased 14 percent during the same time period.
Despite a 58 percent month-over-month drop in foreclosure activity in June, Nevada posted the nation’s second highest foreclosure rate in the first half of 2013: 1.40 percent of housing units with a foreclosure filing (one in every 71) during the six-month period. A total of 16,291 Nevada properties had a foreclosure filing in the first half of 2013, up 12 percent from the previous six months but down 21 percent from a year ago. New state legislation (AB 300) that changes the foreclosure process in Nevada took effect in June.
Illinois foreclosure activity in the first half of 2013 decreased from the previous six months and a year ago, but the state still posted the nation’s third highest foreclosure rate: 1.20 percent of housing units with a foreclosure filing (one in 83) during the six-month period. In June Illinois foreclosure starts (LIS) decreased 68 percent from a year ago and bank repossessions were down 49 percent from a year ago, but scheduled foreclosure auctions increased 65 percent during the same time period to the highest monthly level since July 2010.
Ohio foreclosure activity in the first half of 2013 increased 2 percent from a year ago, helping the state post the nation’s fourth highest foreclosure rate: 0.96 percent of housing units with a foreclosure filing (one in every 104). Georgia posted the nation’s fifth highest state foreclosure rate during the first half of the year: 0.86 percent of housing units with a foreclosure filing (one in every 117) despite a 47 percent year-over-year drop in foreclosure activity.
Other states with foreclosure rates among the 10 highest in the first six months of 2013 were Arizona (0.81 percent of housing units with a foreclosure filing), South Carolina (0.80 percent), Maryland (0.80 percent), Washington (0.78 percent), and Indiana (0.66 percent).
Florida accounts for top five metro foreclosure rates, 12 of top 20
Miami posted the highest foreclosure rate in the first half of 2013 among metropolitan statistical areas with a population of 200,000 or more: 2.35 percent of housing units with a foreclosure filing (one in every 43) during the six-month period – nearly four times the national average.
Four other Florida cities joined Miami to round out the top five metro foreclosure rates in the first half of 2013: Orlando at No. 2 (1.94 percent of housing units with a foreclosure filing); Jacksonville at No. 3 (1.91 percent); Ocala at No. 4 (1.85 percent); and Tampa at No. 5 (1.74 percent). Florida cities accounted for a total of 12 of the top 20 metro foreclosure rates.
Metros outside of Florida with foreclosure rates in the 20 highest nationwide were Rockford, Ill., at No. 6 (1.73 percent of housing units with a foreclosure filing); Las Vegas at No. 8 (1.59 percent); Chicago at No. 9 (1.52 percent); Akron, Ohio at No. 12 (1.32 percent); Columbus, Ohio at No. 14 (1.22 percent); Stockton, Calif., at No. 17 (1.16 percent); Atlanta at No. 18 (1.11 percent); and Cleveland at No. 19 (1.09 percent).
Foreclosure process lengthens nationwide
U.S. properties foreclosed in the second quarter of 2013 were in the foreclosure process an average of 526 days from the initial public foreclosure notice to the completed foreclosure, up 10 percent from 477 days in the first quarter.
The average time to foreclose was 1,033 days in both New York and New Jersey – the longest among the states. New York’s timeline was down 2 percent from the previous quarter while New Jersey’s timeline increased 3 percent. Other states with the longest average foreclosure timelines were Florida (907 days), Hawaii (824 days) and Illinois (817 days).
The average time to foreclose was 184 days in Virginia, the shortest of any state. Other states with average foreclosure timelines below the national average included Texas (209 days), Minnesota (239 days), Georgia (240 days), and Arizona (255 days).