Foreclosures Drop in 62% of Metro Areas, Says RealtyTrac

While the real estate market has not recovered from the peak prices seen in 2007 it made huge progress during the past year. RealtyTrac reports that foreclosure activity decreased from a year ago in 131 out of the nation’s 212 metropolitan areas with a population of 200,000 or more —  that’s a 62 percent decline.

Foreclosure activity decreased annually in 12 out of the nation’s 20 largest metro areas, led by San Francisco (36 percent), Detroit (31 percent), Los Angeles (29 percent), Phoenix (27 percent) and San Diego (26 percent).

The biggest annual increases in foreclosure activity among the nation’s 20 largest metro areas were in New York (69 percent), Tampa (43 percent), Philadelphia (34 percent), Chicago (34 percent), and Seattle (20 percent).

So why the decline in foreclosure activity?

First, the inventory of potentially distressed homes has declined if only because we have had so many foreclosures and short sales in recent years.

Second, many courts have decided that electronic trading and recordation of deeds and notes is legally acceptable in their jurisdiction, thus ending one of the ways in which homeowners could challenge foreclosure actions when lenders could not physically present the note in court.

Third, Wall Street reform is having a great impact on the mortgage marketplace. Loans today are one fourth as likely to fail as mortgages made before 2007.

“Two-thirds of the nation’s largest metros posted decreases in foreclosure activity in the third quarter, indicating that most of the nation’s housing markets are past the worst of the foreclosure problem” said Daren Blomquist, vice president at RealtyTrac. “In fact foreclosure activity in September 2012 was below September 2007 levels in 58 percent of the metro markets we track.

“Still, rebounding foreclosure activity in some markets remains a threat to home price stability and growth in those markets,” Blomquist continued. “The rebounding foreclosure activity tends to be in markets where the foreclosure process slowed down most dramatically in the last two years, resulting in a buildup of foreclosures in limbo that lenders are finally working through this year.

Here’s more from RealtyTrac:

Top 20 metro foreclosure rates

Despite a 21 percent annual decline in foreclosure activity, Stockton, Calif., documented the nation’s highest metro foreclosure rate in the third quarter — one in every 67 housing units with a foreclosure filing, more than three times the national average.

California cities — including Stockton— accounted for the seven highest metro foreclosure rates in the nation during the third quarter, although foreclosure activity decreased from a year ago in all seven metros.

Foreclosure activity increased from a year ago in all three remaining metros among the top 10: Rockford, Ill., at No. 8 (53 percent increase), Chicago at No. 9 (34 percent increase), and Miami at No. 10 (11 percent increase).

Including Miami, seven Florida cities ranked among the top 20 metro foreclosure rates in the third quarter. Six out of the seven Florida metros in the top 20 posted annual increases in foreclosure activity. Ocala was the only exception at No. 20 (7 percent annual decrease).

California cities claimed two additional spots in the top 20: Oxnard-Thousand Oaks-Ventura at No. 17 and Fresno at No. 18. The other two metros with foreclosure rates among the 20 highest nationwide were Atlanta at No. 15 and Phoenix at No. 16.

Top foreclosure rates among largest metros

The Riverside-San Bernardino metro area in Southern California registered the highest foreclosure rate among the nation’s 20 largest metropolitan areas in the third quarter: one in every 73 housing units with a foreclosure filing during the quarter — more than three times the national average.

Five other metro areas among the nation’s 20 largest registered foreclosure rates more than twice the national average: Chicago (one in 98 housing units), Miami (one in 100 housing units), Tampa (one in 106 housing units), Atlanta (one in 112 housing units), and Phoenix (one in 113 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 quarter — broken out by type of filing. Some foreclosure filings entered into the database during a quarter may have been recorded in previous quarters. 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: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee 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). For the quarterly report, if more than one foreclosure document is received for a property during the quarter, only the most recent filing is counted in the report. The quarterly report also checks if the same type of document was filed against a property previously. If so, and if that previous filing occurred within the estimated foreclosure timeframe for the state where the property is located, the report does not count the property in the current quarter.


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