U.S. Foreclosure Starts Increase 12 Percent in October

Biggest Monthly Percent Increase in Foreclosure Starts since August 2011;
Foreclosure Starts Still Down 14 Percent from a Year Ago;
Top Five State Foreclosure Rates in Maryland, New Jersey, Florida, Nevada, Illinois

IRVINE, Calif. – Nov. 12, 2015 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its U.S. Foreclosure Market Report™ for October 2015, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 115,134 U.S. properties in October, an increase of 6 percent from the previous month but still down 6 percent from a year ago. The report also shows one in every 1,147 U.S. housing units with a foreclosure filing during the month.

The 6 percent monthly increase in overall foreclosure activity was caused primarily by a 12 percent monthly jump in foreclosure starts, with 48,605 properties starting the foreclosure process for the first time in October. The October monthly increase was the largest month-over-month increase since August 2011, when there was a 24 percent month-over-month increase. Despite the month-over-month increase, foreclosure starts in October were still down 14 percent from a year ago.

“We’ve seen a seasonal increase in foreclosure starts in October for the past five consecutive years, so it’s not too surprising to see the monthly increase this October,” said Daren Blomquist, vice president at RealtyTrac. “However, the 12 percent increase this October is more than double the average 5 percent monthly increase in the past five Octobers, and the even more dramatic monthly increases in some states is certainly a concern. The upward trend in foreclosure starts in those states in some cases could be an indication of fissures in economic fundamentals driving more distress and in other cases is more likely an indication of long-term delinquencies finally entering the foreclosure pipeline.”

October foreclosure starts increased from the previous month in 34 states, including California (up 21 percent), Florida (up 13 percent), New Jersey (up 15 percent), Illinois (up 20 percent), Maryland (up 300 percent), Washington (up 34 percent), and Michigan (up 37 percent).

Bank repossessions increase annually in 36 states

There were a total of 36,582 properties repossessed by lenders (REOs) in October, down 9 percent from the previous month but up 31 percent from a year ago — the eighth consecutive month with a year-over-year increase in REOs. Despite the annual increase, REOs in October are about one-third of their peak of 102,134 in September 2010. Through the first 10 months of 2015 there have been 369,920 completed foreclosures, up 33 percent from 277,815 REOs during the same time period in 2014.

REOs increased from a year ago in 36 states in October, including New York (up 320 percent), New Jersey (up 275 percent), Texas (up 119 percent), North Carolina (up 89 percent), Nevada (up 83 percent), and Illinois (up 62 percent).

“Foreclosed properties are still up against the same circumstances that any other seller in this market faces which is fair market value and beyond,” said Al Detmer, broker associate at RE/MAX Alliance, covering the Greeley market in Colorado. “Bank owned property asset managers are still requesting top dollar and today’s market demand is responding in their favor. Diamond in the rough distressed properties are the find for the cash heavy buyer that can fulfill a fix and flip fantasy and be the chicken dinner buyer to secure the deal for the near future.”

Those states that saw the most completed foreclosures for the month included Florida (5,760 REOs), California (2,697 REOs), Illinois (2,624 REOs), New Jersey (1,960 REOs) and Texas (1,776 REOs).

Scheduled foreclosure auctions increase annually in 17 states

A total of 46,698 U.S. properties were scheduled for foreclosure auction during the month, up 12 percent from the previous month but down 22 percent from a year ago.

Scheduled foreclosure auctions — which can be foreclosure starts in some states — increased from a year ago in 17 states, including New York (up 47 percent), Massachusetts (up 45 percent), North Carolina (up 24 percent), New Jersey (up 17 percent), and Maryland (up 3 percent).

“I’m not surprised to see that foreclosure activity in Seattle has dropped again. Home prices continue to rise and the economy is growing at a rate well above the national average. So, what’s a buyer to do if they’re looking for a good deal in Seattle’s hyper competitive market?” said OB Jacobi, president of Windermere Real Estate, covering the Seattle market.  “One of the best tips is to have your agent search for homes that have been on the market for more than 14 days. When a home doesn’t sell quickly buyers wonder what’s wrong with it and sellers become discouraged. And this can lead to finding that hidden gem that everyone else has overlooked.”

Maryland, New Jersey, Florida, Nevada and Illinois post highest state foreclosure rates

A total of 5,126 Maryland properties had a foreclosure filing in October, up 100 percent from the previous month, but still down 14 percent from a year ago. After dropping out of the top five state foreclosure rates in September for the first time in 2015, Maryland’s foreclosure rate jumped to No. 1 in October thanks to the surge in foreclosure starts. One in every 466 Maryland housing units had a foreclosure filing in October, more than 2.5 times the national foreclosure rate.

The state of New Jersey accounted for 7,559 properties receiving a foreclosure filing in October, a foreclosure rate of one in every 471 housing units — second highest among the states after New Jersey’s foreclosure rate ranked No. 1 in September. New Jersey foreclosure activity in October decreased 4 percent from the previous month, but was still up 87 percent from a year ago — the eighth consecutive month with a year-over-year increase in New Jersey foreclosure activity.

One in every 579 Florida housing units received a foreclosure filing in October, the nation’s third highest state foreclosure rate. Florida’s foreclosure rate has ranked in the Top 5 each month in 2015.  Florida foreclosure activity increased 8 percent from the previous month but was still down 23 percent from a year ago.

Nevada foreclosure activity decreased 6 percent from the previous month, but increased 1 percent from a year ago, giving the state the nation’s fourth highest state foreclosure rate: one in every 593 housing units with a foreclosure filing.

Illinois foreclosure activity increased 21 percent from the previous month, and the state posted the nation’s fifth highest foreclosure rate: one in every 680 housing units with a foreclosure filing.

“Coupled with increases in home equity, and an increasing job market, the level of foreclosures continue to decline across much of Ohio for the month of October,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio. “New job sectors involving banking, education, and healthcare are creating added employment opportunities that are increasing the demand and need for housing across the state.”

Other states with foreclosure rates among the nation’s 10 highest in October were South Carolina at No. 6 (one in every 751 housing units with a foreclosure filing); North Carolina at No. 7 (one in every 901 housing units); Ohio at No. 8 (one in every 968 housing units); New Mexico at No. 9 (one in every 1,020 housing units); and Washington at No. 10 (one in every 1,102 housing units).

New Jersey, Maryland and Florida cities post highest metro foreclosure rates

October marked the 4th consecutive month where the Atlantic City, New Jersey metro remained in the No. 1 spot for having the highest foreclosure rate among metropolitan statistical areas with a population of 200,000 or more. One in every 257 Atlantic City housing units had a foreclosure filing in October, more than four times the national average. Atlantic City foreclosure activity in October increased 14 percent from previous month — driven by a 26 percent monthly spike in foreclosure starts — and increased 134 percent increase from a year ago.

Foreclosure activity in October increased 177 percent from a year ago in Columbia, South Carolina, and the metro area posted the nation’s second highest foreclosure rate: one in every 333 housing units with a foreclosure filing.

Foreclosure activity increased 118 percent from a year ago in Trenton, New Jersey, and the metro area posted the nation’s third highest metro foreclosure rate: one in every 390 housing units with a foreclosure filing).

“We continue to see the year-over-year decline of our South Florida distressed real estate market,” said Mike Pappas, CEO and president of the Keyes Company, covering the South Florida market. “Any new bank owned inventory is quickly digested, as our under $300,000 priced inventory is at the lowest level in years.”

Other metro areas with foreclosure rates in the top 10 highest were Baltimore, Maryland at No. 4 (one in every 429 housing units with a foreclosure filing); Fayetteville, North Carolina at No. 5 (one in every 460 housing units); Jacksonville, Florida at No. 6 (one in every 465 housing units); Miami, Florida at No. 7 (one in every 480 housing units); Rockford, Illinois at No. 8 (one in every 486 housing units); Palm Bay-Melbourne-Titusville, Florida at No. 9 (one in every 514 housing units); and Tampa, Florida coming in at No. 10 (one in every 543 housing units).

Report methodology
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 2,200 counties nationwide, 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: DefaultNotice 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.

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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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