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RealtyTrac: Foreclosure Activity Slows In 61% Of US

Foreclosure activity was uneven during the first half of 2012. According to RealtyTrac, foreclosure activity during the first six months of the year fell in 129 of the nation’s 212 major metro areas (61%) when compared with the same period during 2011. That also means foreclosure activity increased in 83 major metro areas during the same time span.

Seen another way, in 125 of 212 major metro areas (59%) foreclosure filings increased during the first half of 2012 when compared with the last half of 2011. A major metro area includes at least 200,000 people.

The contradictory results illustrate two points. First, in terms of foreclosures, the country remains burdened with excess distressed home inventory but some areas are relatively better off than others. Second, the foreclosure, short sale and REO activity we now see reflects only the visible aspect of the housing crisis. There’s more to come.

The reality is that huge numbers of foreclosure actions remain incomplete and thus not countable. As an example, in my community there has been a foreclosure moratorium for more than a year. Why? Because note ownership issues remain unresolved and robo-signing has thrown the foreclosure process into chaos. The result is that foreclosure notices are being sent out — but the foreclosures themselves have not taken place. This inactivity on the auction front will end with a foreclosure surge once an assortment of legal questions are resolved and then, suddenly, foreclosure numbers will soar with rocket-like speed.

California

RealtyTrac, the leading online marketplace for foreclosure properties, said that California accounted for seven of the 10 highest metro foreclosure rates and 10 of the top 20 metro foreclosure rates during the first half of the year. Florida accounted for four of the top 20 metro foreclosure rates, and Illinois accounted for two of the top 20. Georgia, Arizona, Nevada and Colorado each had one city in the top 20.

“Increasing foreclosure starts in many local markets helped push total foreclosure activity higher in the first half of this year compared to the second half of 2011,” said Brandon Moore, CEO of RealtyTrac. “Those foreclosure starts are welcome news for prospective buyers and real estate brokers in many local markets where a shortage of aggressively priced inventory has been holding up sales activity. Markets with increasing foreclosure starts will likely see more distressed inventory for sale in the form of short sales and bank-owned properties in the second half of the year.”

Here’s more from RealtyTrac.

Top 10 metro foreclosure rates

Stockton, Calif., posted the nation’s highest metro foreclosure rate, 2.66 percent of housing units (one in every 38) with a foreclosure filing in the first half of 2012 — more than three times the national average. There were a total of 6,218 Stockton properties with a foreclosure filing during the six-month period, a decrease of 13 percent from the previous six months and a decrease of 16 percent from the first half of 2011.

Four other California cities ranked in the top 5 metro foreclosure rates despite decreasing foreclosure activity: Modesto at No. 2 (2.61 percent of housing units with a foreclosure filing), Riverside-San Bernardino-Ontario at No. 3 (2.59 percent), Vallejo-Fairfield at No. 4 (2.56 percent), and Merced at No. 5 (2.15 percent).

Atlanta was the only metro area with a top 10 foreclosure rate to register increasing foreclosure activity in the first half of 2012. A total of 46,267 Atlanta area properties had a foreclosure filing during the six-month period, 2.14 percent of all housing units (one in every 47) — the nation’s sixth highest metro foreclosure rate. Atlanta area foreclosure activity increased 3 percent from the previous six months and was up 5 percent from the first half of 2011.


Other metro areas with foreclosure rates in the top 10 were Phoenix at No. 7 (2.08 percent of housing units with a foreclosure filing), Bakersfield, Calif., at No. 8 (2.07 percent), Las Vegas at No. 9 (2.04 percent), and Visalia-Porterville, Calif., at No. 10 (2.03 percent).

Trends in 20 largest metro areas

Half of the nation’s 20 largest metro areas in terms of population documented increasing foreclosure activity from the previous six months, led by the Tampa-St. Petersburg-Clearwater metro area in Florida with a 47 percent increase.

Foreclosure activity during the first half of the year increased more than 20 percent from second half of 2011 in Philadelphia (30 percent), Chicago (28 percent), New York (26 percent), and Baltimore (21 percent).

Seattle foreclosure activity in the first half of 2012 decreased 24 percent from the previous six months, the biggest drop among the nation’s 20 largest metro areas. Other large metro areas where first half foreclosure activity decreased more than 10 percent from the second half of 2011 were San Francisco (21 percent), Detroit (17 percent), Los Angeles (13 percent), Boston (12 percent), and San Diego (11 percent).

Despite a 9 percent decrease in foreclosure activity from the previous six months, the Riverside-San Bernardino-Ontario metro area in Southern California registered the highest foreclosure rate among the 20 largest metro areas, followed by Atlanta, Phoenix, Miami and Chicago.

Best metros for foreclosure buying and investing in second half of 2012

Second quarter foreclosure starts increased from the previous quarter in more than 60 percent of all metro areas with a population of 200,000 or more, and those markets represent areas where more foreclosure inventory will likely be available for sale in the second half of the year.

Among the 132 metro areas with increasing foreclosure starts in the second quarter, RealtyTrac ranked the 10 best markets for foreclosure buying and investing in the second half of 2012. The top 10 list is comprised of metros where the average foreclosure sales price is increasing on an annual basis, average foreclosure sale discounts are still 15 percent or higher, and the unsold inventory of bank-owned homes represents a supply of 20 months or fewer.

How Foreclosure Filings Are Counted

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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