Foreclosures Drop to Eight-Year Low as Crisis Wanes: MortgagesDan Levy
Foreclosure filings in the U.S. plunged last month to the lowest level in almost eight years as investor purchases and an improving economy brought the end of the housing crisis within sight.
Default, auction and repossession notices in November were sent to 113,454 properties, a 15 percent drop from October and the biggest monthly decline in almost three years, Irvine, California-based RealtyTrac said today in a report. The surging wave of defaults that led to 7.7 million homes seized by banks or sold in the foreclosure process since October 2006 is coming to a close, according to the data firm.
“In another year, it will all be done,” Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, said in a telephone interview.
Housing prices are rebounding nationwide, buoyed by investors such as New York-based Blackstone Group LP, which has acquired thousands of foreclosed homes at discounts before renovating and renting them. The S&P/Case-Shiller national home-price index rose 13 percent in September from a year earlier, with all 20 cities in the measure showing gains.
“There is a correlation between institutions buying up property and recovery in the biggest metro areas,” Daren Blomquist, vice president at RealtyTrac, said in an interview. “Investors are playing a huge role.”
RealtyTrac counts five types of filings. The most common are notices of default, scheduled auction and repossession. Foreclosure filings across the country last month were the lowest since December 2005, and decreased in 17 of the 20 largest cities from November 2012, according to the company. Only three areas went against the trend. Filings increased 46 percent in the Baltimore region, 34 percent in Philadelphia and 5.8 percent in Washington D.C.
Foreclosure starts fell 32 percent from a year earlier to 52,826, also the lowest in almost eight years. The number of homes that got an initial notice declined in 35 states. Fifteen states went the other way, led by Pennsylvania, which had an increase in starts of 233 percent; Delaware up 104 percent and Maryland, up 74 percent, RealtyTrac said.
Maryland, Pennsylvania, New York and Washington D.C. have court oversight of repossessions, which tends to slow the process of distressed homes coming to market and a price recovery, Rosen said.
Bank seizures dropped 48 percent from a year earlier to 30,461, the lowest since July 2007. Only five states showed increases in November, with advances of 179 percent in Delaware; 41 percent in Maryland; 9 percent in Connecticut; 6 percent in Maine and 2 percent in Iowa.
Auction notices, the first official filing in some states, increased from a year earlier in 19 states. They soared 726 percent in Oregon; 217 percent in Massachusetts; 214 percent in Utah; 199 percent in Connecticut and 104 percent in Delaware.
Florida filings fell 23 percent from a year earlier after a 46 percent plunge in foreclosure starts. Repossessions fell 16 percent. Auctions rose for the 11th straight month, up 2 percent from November 2012, in a sign that lenders are clearing their distressed inventory as prices rise, Blomquist said.
The state had the highest foreclosure rate for the 11th time in 15 months, with one in 392 households receiving a notice in November. Florida also has two metropolitan areas with the highest rates: Miami at one in 307 and Tampa at one in 410, according to RealtyTrac. Still, defaults have stopped rising, and the state is showing “improvement across the board,” Blomquist said.
Prices in the Jacksonville, Florida area rose about 16 percent in the year through November, with an average three-bedroom home listed today for about $150,000, according to Alex Sifakis, president of JWB Real Estate Capital LLC, a locally-based buyer of foreclosed homes.
JWB’s cost is about $120,000 to buy and renovate a similar property, which it either sells for a 25 percent gain or rents for $1,350 a month, Sifakis said in an interview. Florida’s judicial process means lenders will put distressed inventory on the market for at least 12 months, he said.
“Prices are definitely on the upswing, and there’s still room to run,” Sifakis said.
The average sales price this year through November at Coldwell Banker Residential Real Estate’s 80 offices in Florida jumped 13 percent to $285,000 compared with a year earlier. Traditional second-home buyers from the U.S. have returned to the market, along with a new segment of international purchasers, said Clark Toole, president of the brokerage.
“The average sales price has been rising, and fewer people are underwater,” said Toole in an interview from his office in Sarasota. “We had such a decline going from peak to trough, then the world looked at Florida and saw great value.”
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