Foreclosure Starts Below Pre-Crisis Levels, Scheduled Auctions and REOs Above;
13 of 20 Largest Metro Areas Post Annual Increases in Foreclosure Activity
IRVINE, Calif. – June 18, 2015 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its May 2015 U.S. Foreclosure Market Report™, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 126,868 U.S. properties in May 2015, up 1 percent from the previous month and up 16 percent from a year ago to a 19-month high. The U.S. foreclosure rate in May was one in every 1,041 housing units with a foreclosure filing.
The increase in May was driven primarily by a jump in bank repossessions (REOs), which at 44,892 were down 1 percent from the previous month but up 58 percent from a year ago, and a 5 percent year-over-year increase in scheduled foreclosure auctions.
REOs increased on a year-over-year basis for the third consecutive month, and scheduled foreclosure auctions have increased on a year-over-year basis in four of the last eight months. May REOs were 56 percent below the peak of 102,134 REOs in September 2013 but still nearly twice the average monthly number of 23,119 in 2005 and 2006 before the housing bubble burst in August 2006. (Also see special methodology note on REO data collection below.)
“May foreclosure numbers are a classic good news-bad news scenario, with the number of homeowners starting the foreclosure process stabilizing at pre-housing crisis levels but the number of homeowners actually losing their homes to foreclosure still well above pre-crisis levels and on the rise,” said Daren Blomquist, vice president at RealtyTrac. “Lenders and courts are pushing through stubborn foreclosure cases that have been languishing in foreclosure limbo for years as options to prevent foreclosure are exhausted or left untapped.”
38 states post annual increase in REOs
Following the national trend, 38 states and the District of Columbia posted year-over-year increases in REOs, including New Jersey (up 197 percent), New York (up 116 percent), Ohio (up 114 percent), Georgia (up 108 percent), Pennsylvania (up 106 percent), Florida (up 63 percent), Michigan (up 63 percent), Maryland (up 62 percent), and California (up 31 percent).
“Even though national foreclosures increased a tad and REOs in California jumped we saw an expected settling in the Los Angeles metro numbers,” said Mark Hughes, chief operating officer with First Team Real Estate, covering the Southern California market. “As we settle back into more stable markets we will see some areas up and some down in foreclosure starts but overall we are settling back towards pre-boom distress percentages as a part of the overall market. There’s still more inventory to clean up but all indicators are these are the final and in some cases the toughest distressed properties to move through the system. A drop in distressed inventory adds even more upward pressure on pricing as inventory still lags behind good buyer interest across the region.”
“As available housing inventory begins to increase, we are noticing slight increases in foreclosure activity across Ohio — particularly, in Columbus for homes priced under $200,000, which appears to be driven by Home Equity Lines of Credit maturity loans, as well as an aging population of homeowners not understanding opportunities available to them from increased area prices,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio. “As income has not kept up with growing medical costs and credit expenses, many of these same homeowners are now in negative cash flow and equity situations. These homeowners should reach out to a neighborhood real estate or mortgage professional immediately to find out what options are available to them.”
Foreclosure starts up annually for the first time in four months
A total of 51,414 U.S. properties started the foreclosure process for the first time in May 2015, down 1 percent from the previous month but up 4 percent from a year ago after four consecutive months of year-over-year decreases. Despite the increase, U.S. foreclosure starts are still below pre-crisis levels from 2005 and 2006 when they averaged 52,279 a month before the housing price bubble burst in August 2006.
Twenty-five states posted year-over-year increases in foreclosure starts, including New Jersey (up 73 percent), Virginia (up 39 percent), Missouri (up 19 percent), Massachusetts (up 14 percent), and Washington (up 11 percent).
Scheduled foreclosure auctions are 40 percent higher than pre-crisis levels
A total of 49,413 properties in May were scheduled for a future foreclosure auction (scheduled foreclosure auctions are foreclosure starts in some states), up 6 percent from the previous month and up 5 percent from a year ago. U.S. scheduled foreclosure auctions so far this year are running about 40 percent higher than their pre-crisis levels from 2005 and 2006.
Twenty-six states posted increases in scheduled foreclosure auctions from a year ago, including New York (up 118 percent), Illinois (up 23 percent), New Jersey (up 22 percent), and Maryland (up 11 percent).
Florida posts the nation’s highest foreclosure rate for the third consecutive month
Driven by a 63 percent annual increase in REOs, overall foreclosure activity in Florida increased 4 percent from the previous month and was up 7 percent from a year ago in May, and the state’s foreclosure rate ranked No. 1 for the month with one in every 409 housing units with a foreclosure filing.
Other states with foreclosure rates among the top 10 highest nationwide included New Jersey (one in every 483 housing units with a foreclosure filing), Maryland (one in every 531 housing units), Nevada (one in every 590 housing units), Ohio (one in every 763 housing units), Illinois (one in every 765 housing units), Indiana (one in every 963 housing units), and South Carolina (one in every 987 housing units).
13 out of the 20 largest metros posted annual increases in foreclosure activity
Among the nation’s 20 largest metropolitan statistical areas, 13 posted an annual increase in foreclosure activity in May, including Dallas (up 64 percent), St. Louis (up 56 percent), Baltimore (up 35 percent), New York (up 34 percent), Philadelphia (up 28 percent), Atlanta (up 27 percent), Detroit (up 27 percent), San Francisco (up 25 percent), Houston (up 18 percent), Miami (up 17 percent), and Seattle (up 10 percent from a year ago).
“The increase in foreclosure activity in the Seattle area doesn’t concern me at this time,” said Matthew Gardner, Chief Economist Windermere Real Estate, covering the Seattle market. “Given the growth in home values in our region, I believe that it’s fairly safe to assume that this increase is primarily a function of banks starting foreclosure proceedings after having delayed taking action for some time. I would not be surprised to see the annual rate continue to remain elevated for a while as we get through the pipeline.”
Atlantic City posts highest foreclosure rate among metro areas
Of metro areas with a population of over 200,000, those with the highest foreclosure rates were Atlantic City, New Jersey (one in every 230 housing units with a foreclosure filing), Lakeland, Florida (one in every 331 housing units), Ocala, Florida (one in every 335 housing units), Miami, Florida (one in every 347 housing units) and Jacksonville, Florida (one in every 348 housing units).
“The last REO remnants from the great recession continue to work their way through our judicial system,” said Mike Pappas, CEO and president of the Keyes Company, covering the South Florida market. “The past decade has been a real estate roller coaster ride but we are seeing a balance and steadiness in this current market.”
Special methodology note on REOs
In the first quarter of 2015, RealtyTrac started receiving REO data from a new source that provides the data more quickly in some cases than other sources. This new source may be resulting in some REOs reported by RealtyTrac in May that would have been reported in subsequent months using other sources. As always, if RealtyTrac receives an REO filing (or any other foreclosure filing type) on the same property from multiple sources, or from the same source multiple times, that REO filing is only counted in the RealtyTrac U.S. Foreclosure Market Report the first time it is received.
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the month — broken out by type of filing. Some foreclosure filings entered into the database during the month may have been recorded in previous months. Data is collected from more than 2,500 counties nationwide using a combination of public record and proprietary sources, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee’s Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). The report does not count a property again if it receives the same type of foreclosure filing multiple times within the estimated foreclosure timeframe for the state where the property is located.
The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.
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