That proclamation may be premature. What’s lurking on lenders’ balance sheets is enough to put a damper on Tampa’s nascent housing rebound: foreclosure activity there has increased 111% since last May, with 27,703 homes in some state of the foreclosure process. That means the mortgage on one out of every 304 homes is in default in the city. At the current sales rate, that’s a hefty 22-month supply of distressed properties. Given that these homes sell at a 24% discount on average, the prices of neighboring non-distressed homes could be pulled down, too.
The Cigar City is one of eight Florida hubs that made Forbes’ list of America’s new foreclosure hubs. “I’d keep my eye on the Florida cities,” cautions Daren Blomquist, vice president of RealtyTrac, an Irvine, Calif.-based foreclosure listing site. “Because of the big delays we saw in foreclosures and now big increases in activity, I think you can expect to see home prices there soften in the future.”
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| English: Foreclosure Sign, Mortgage Crisis (Photo credit: Wikipedia) |
RealtyTrac helped us compile a list of the 20 metro areas where a rebound in foreclosure activity could put a damper on home prices… again.
The data is broken down by Metropolitan Statistical Areas, which are localities defined by the U.S. Office of Budget and Management that usually contain a city and its neighboring suburbs. We combed through RealtyTrac’s data for more than 200 MSAs, considering a variety of factors including the number of both preforeclosures and REOs (bank-owned homes) relative to market size, the number of months of supply of shadow inventory in each market, and the change in the local foreclosure rate from May 2011 through May 2012. We also looked at the percentage that distressed sales have contributed to total sales activity in each market and how much of a discount that those distressed properties have been selling at.
All of the 20 metro areas that made this list have 20 months or more worth of foreclosure inventory; are witnessing 20% increases or higher in foreclosure activity; clocked May foreclosure rates that were above the national average; and have housing markets for which 10% or more of all home sales are distressed.
“A lot of the big increases are in areas typically not thought of as hot spots of foreclosure activity,” explains Blomquist. “It’s the judicial states that have the biggest increases now,” he says, referring to states where foreclosures are processed through the court system.
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| Foreclosure (Photo credit: zane.hollingsworth) |
Since a $25 billion foreclosure settlement was reached earlier this year, filings have finally begun to move through the system again in the most delayed areas, creating a new wave of foreclosures. So while foreclosures in hard-hit states where the process is less rigorous — like California, Nevada, and Arizona — have actually been decreasing, judicial states like Florida, Ohio and Pennsylvania, are facing an onslaught of new filings.
In Ohio, four metro areas are seeing marked upticks in activity: Dayton, Cleveland, Canton and Columbus. In Dayton, new filings have increased 92% and represent a 30-month inventory. These properties, which constituted 21% of May’s home sales, typically fetch 36% less than comparable non-distressed homes. In Cleveland, new filings increased 42% from May 2011 through May 2012, representing a 31-month inventory.
In Pennsylvania, the York metro area is currently experiencing a 150% increase in activity. As of May, 1,278 homes were pushing through the pre-foreclosure pipeline – one out of every 439 properties. Blomquist notes that the uptick may be partly attributable to the fact that the Homeowners Emergency Mortgage Assistance Program, a state-funded foreclosure prevention initiative, was canceled last summer due to budget cuts.
But while foreclosures are back on the rise in some cities, it’s not denting local realtors’ optimism that the worst of the real estate recession has come and gone. “I think there could be some impact on the market, but I don’t think it will be as much as it would have been in the past because we have more buyers in the market,” asserts Tami Behler, a real estate agent in York with Prudential Bob Yost.
Blomquist remains less confident. He suspects renewed activity will cause downward pressure on prices throughout the rest of this year, stabilizing in 2013 or 2014, depending on the market. “The tragedy of this was that nationwide, 2010 was probably the peak in foreclosures and activity would have started to trend downward naturally last year,” laments Blomquist. “But because of the delays, we are going to see this last gasp in foreclosures.”
List: America’s 20 New Foreclosure Capitals
Taken from: http://www.forbes.com/sites/morganbrennan/2012/07/03/americas-new-foreclosure-capitals
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