7:03am | RealtyTrac released its U.S. Foreclosure Market Report for the first quarter of 2011, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — in the first quarter fell 15 percent from the previous quarter and were down 27 percent from the first quarter of 2010.
Now for the bad news: The report also shows one in every 191 U.S. housing units received a foreclosure filing during the quarter, and many experts say the market still has some bad times to work though.
According to the RealtyTrac report, foreclosure filings were reported on 239,795 U.S. properties in March, a 7 percent increase from the previous month but still down 35 percent from March 2010, when 367,056 homeowners received a foreclosure notice. That was the highest monthly total in the history of the RealtyTrac monthly report since its inception in January of 2005.
“The nation’s housing market continued to languish in the first quarter, even as foreclosure activity fell to a three-year low,” said James J. Saccacio, chief executive officer of RealtyTrac, in a statement. “Weak demand, declining home prices and the lack of credit availability are weighing heavily on the market, which is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork.”
Some Long Beach area market experts were encouraged by the news, but say cautious optimism is in order — and the spate of foreclosures may not be over.
“While the real estate market appears to be stabilizing, we still have a long way to go,” said Geoff McIntosh of Main Street Realtors in Long Beach. “This improvement in the number of defaults is encouraging but is fueled, at least in part, by self-imposed delays by major lenders while the re-evaluated their foreclosure processes in light of the discovery last year that some repossessions might have lacked proper authority. Now that we are apparently past that issue, I believe the numbers going forward will be a more accurate reflection of the actual status of the health of the real estate market.”
He continued: “There are certainly some good values in the market locally and I believe outstanding opportunities will be with us for some time to come. I’m concerned that the probability of an increase in mortgage interest rates could slow the number of transactions and, therefore, the speed of the recovery.”
Other Long Beach area Realtors say the local market is beginning to fare far better than the rest of the state and the nation.
“‘Knock on Wood,’ ‘Thank Goodness,’ ‘Hallelujah,’ whichever overused phrase you want to choose; they describe the difference in our market of Long Beach versus the vast majority of the markets across the state and nation,” said Eric Bryant, vice president of internet services for Coldwell Banker Coastal Alliance in Long Beach. “The ‘Shadow Inventory’ is just not materializing in our market. In fact, both Clarus Market Metrics and Altos Market Research are showing that out inventory continues to go down, our prices are inching up, and the market here is thriving.”
Richard Daskam, with Keller Williams Realty in Los Alamitos, sees a fluctuating local market, and believes banks may be continuing to hold back the foreclosure floodgates.
“Locally, it’s been pretty sporadic,” said Daskam. “Some areas that we were seeing a lot of foreclosures in over the past year are having very little, and other areas where there has been nothing, we are seeing a lot. I’ve got several buyers who keep asking ‘when will a foreclosure come up in (fill in the blank) part of town?’ I’ve been going through the daily foreclosure lists for my buyers and investors, tracking foreclosures in RealtyTrac, reading the daily filings in the Press-Telegram, and still, there’s no rhyme or reason, other than it appears the majority of the foreclosure filings are owners that are trying to get a loan modification done—or, that has been a theory out there. As I speak to owners that are behind on payments, many haven’t even called their banks, the owners have just stopped making payments and ignoring the bank’s calls.”
Daskam posed a possibility that in Southern California, since the loans are primarily high-balance loans, it is possible that the banks haven’t been able to afford to foreclose on Jumbo loans because of the reserve requirements required once the bank owns the property.
“As long as the bank doesn’t move that loan to the ‘bad’ column, they aren’t reporting it to government as a bad loan,” Daskam said.
“Now that banks are beginning to show their billion-dollar profits, we will likely start to see more of the high-balance loans being foreclosed on. Again, a theory, but one worth considering,” he continued. “In 10 years, we will probably look back at this market and determine that banks purposely slowed their foreclosures for many different reasons, but that it benefited them because prices didn’t go as low as they could have and in the end the banks benefited by slowing foreclosing.”
The RealtyTrac report shows that behind Nevada and Arizona, California had the third highest foreclosure rate in the nation. First quarter foreclosure activity in California fell 4 percent from the previous quarter and was down 22 percent from the first quarter of 2010, but the state continued to be among the nation’s worst with one in every 80 housing units with a foreclosure filing during the quarter. With 168,543 properties with a foreclosure filing, California accounted for nearly 25 percent of U.S. foreclosure activity in the first quarter.
One in every 98 Utah housing units had a foreclosure filing in the first quarter, making that state No. 4 ahead of Idaho’s fifth highest state foreclosure rate (one in every 106 housing units). Other states with foreclosure rates ranking among the top 10 in the first quarter were Georgia, Michigan, Florida, Colorado and Illinois.