RealtyTrac Election Housing Report Finds Housing Market Worse Off than in 2008

Despite the many recent signs of life in the real estate market -- one possible explanation for why housing policy has remained largely absent from the presidential debates -- the reality is still grim. The market is far down from where it was in 2008, when the financial crisis was reaching its peak, let alone the days of the housing boom, according to online foreclosure marketplace RealtyTrac's "Election Housing Report."

Only 35 percent of nearly 1,000 housing markets are doing better than they were on the cusp of the last presidential election, when the meltdown was bearing down on the economy at full force, according to the RealtyTrac report released Monday.

The rest of the country's housing markets analyzed by RealtyTrac are in worse shape than they were then, hampered by a persistent glut of foreclosures, high unemployment and depressed home prices, according to the report.

 (Photo credit: zane.hollingsworth)

"Even though there's a lot of good signs, the housing market is still a drag on the economy in many ways," said Daren Blomquist, vice president of RealtyTrac, adding that it still needs some "TLC."

The report found that home prices are below 2008 levels in a majority of counties and that distressed home sales continue to hog a bloated share of total sales. At least 10 percent or more of sales were distressed in most counties, and at least 25 percent were distressed in 1 out of 5 counties, according to the report. That's even considering that existing home sales and home prices are up significantly from last year, and home construction is higher than it's been in four years.

RealtyTrac looked at more than 900 counties nationwide and found that 65 percent of counties measured lower on at least three of five metrics that gauge market stability. The metrics were foreclosure starts (the number of foreclosures initiated), foreclosure sales, foreclosure inventory, the unemployment rate and home prices.

Stubbornly high unemployment and still-rock-bottom home prices appear to be the most consistent drag on the markets examined, Blomquist said.

Some Marked Improvements

Despite the sobering findings, the report also points to marked improvement since the height of the foreclosure crisis. Today, 1.5 million homes are in some stage of foreclosure, down from a peak of 2.2 million in January of 2011, Blomquist said. And foreclosure filings in September, at 180,000, were only about half of what they were in March of 2010, he said.

The markets that have made the most progress are often located in states that allow banks to repossess homes efficiently, Blomquist said. It's partly for this reason that conservatives oppose heavy-handed government action in the housing market and call for -- as Mitt Romney put it -- allowing the housing market to hit bottom, rather than nudging banks to eschew foreclosures.

"Judicial" states, which require a judge to sign off on a foreclosure, are generally moving towards recovery at a slower pace than in non-judicial states, Blomquist said.

"The delays have ensured that people aren't being improperly foreclosed on," he said. "But I also see the other side: 'Well, these foreclosures still have to be dealt with at some point.' "

By Teke Wiggin

Taken from: http://realestate.aol.com/blog/2012/10/22/realtytrac-election-housing-report-finds-housing-market-worse-of/

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The Shocking Reason Why The Foreclosure Near You Won't Go Away

Ever wonder why that house on your street is just sitting there, making the neighborhood look crummy? You're not alone.

Every month, there are hundreds of thousands of home foreclosures across the country. They're wreaking havoc on property values -- and our psyche.

It's hard to miss these uncared-for homes with their overgrown lawns and wild-looking bushes. The solution seems simple: Stick a for-sale sign in the yard and get that eyesore sold. But that isn't what's happening.

The numbers are alarming. How much time does it take to settle a typical foreclosure? Try 370 days -- and then add another 180 days before it's actually sold.

That's more than a year and a half to get a blighted property into the hands of a responsible homeowner. To gain perspective on how bad things are, the average foreclosure in 2007 took just 150 days to close. Oh, to have those days back.

But why doesn't that cruddy house down the street sell? The answer may surprise you: There was the possibility that banks were holding back on listing foreclosures because they didn't want to flood the market and cause prices to tank again.

Daren Blomquist, vice president of the foreclosure listing website RealtyTrac, said banks are slammed by high foreclosure volume and the additional scrutiny resulting from improper foreclosures of the past. Some wondered aloud if banks were concerned about a flood, Blomquist said.

(Photo credit: Wikipedia)

In April, the banks reached a $25 billion foreclosure abuse (robo-signing) settlement, and, bam, second-quarter filings shot up 9% from the first quarter. It seems the banks are more comfortable with foreclosing again. (The five major banks are paying for their robo-signing practices, in which employees signed off on foreclosures without properly reviewing their cases. One bank reportedly approved nearly 10,000 documents in one month's time.)

That's not the only reason foreclosures languish. David Le, a Redfin real estate agent in Northern Virginia, noted that in one of his recent deals, it took nine months before the tenant of a Fannie Mae-owned property was evicted. Next came a flurry of activity with inspections and appraisals that lasted about three months until the house was listed.

Also, rules and regulations can be tough, depending on the state. Fannie Mae deals, for example, adhere to strict guidelines. Once the price is set, it can't be reduced in the first 30 days, but few buyers are willing to pay full asking price for distressed homes. After a month, the price is lowered incrementally by 5% or 10%. Because Fannie Mae and Freddie Mac focus on the bottom line -- and not how a property looks -- this leaves little room for negotiation.

It might seem that nobody cares about moving these properties quickly. Since 2007, more than 8 million foreclosure starts have been filed. But real estate agents in many parts of the country are seeing an uptick in demand and lack the inventory to meet it.

"In some areas, foreclosures are selling like hotcakes," Blomquist said. "Buyers see foreclosures as great deals, and agents want to have more of that to sell. In some of the harder-hit markets, foreclosure inventory has dwindled down to a smaller amount, and the demand is there from the buyers."

The good news is we should see home sales speed up in the near future. In the first quarter of 2012, a 25% increase in pre-foreclosure sales signaled the tide is turning for how banks deal with distressed homes. Banks are becoming more open to pre-foreclosures because they minimize losses. With pre-foreclosure sales, a property is sold by short sale or auction before the foreclosure process is complete. In the first quarter, the average price of a pre-foreclosure home was $27,000 higher than a foreclosure sale, according to RealtyTrac.com.

While it might take a few years for the housing market to ramp back up, it's nice to know our neighborhoods won't always look like a Tim Burton comedy.

The Investing Answer: Don't freak out if the foreclosures on your street are bringing down the neighborhood. Talk with neighbors about taking turns mowing the blighted yards. Make sure your home is fairly appraised to ensure a premium offer. Talk to real estate agents and watch the market as it moves toward a recovery.
Taken from: http://www.investinganswers.com/personal-finance/homes-mortgages/shocking-reason-why-foreclosure-near-you-wont-go-away-4532

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America's New Foreclosure Capitals

Real estate in Florida’s biggest cities has been on fire. Thanks to burgeoning demand and tight inventory levels, home prices in many of the Sunshine State’s markets have begun to tick up modestly. Take Tampa. Thanks to a 40% drop in inventory over the past year, asking prices are up 11%, according to Realtor.com. It has many folks crying “recovery.”

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.”

English: Foreclosure Sign, Mortgage Crisis (Photo credit: Wikipedia)

Behind The Numbers

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.

Foreclosure (Photo credit: zane.hollingsworth)

Blame the robo-signing scandal for the new flood of foreclosures in those states. It caused lenders to hit the pause button on millions of defaulted home loans, delaying the foreclosure process and in some cases halting it altogether. This was especially true in states where defaults must go through the courts, the so-called judicial states. The resulting delays caused an artificial decline in foreclosures, establishing a shadow inventory of roughly 2 million distressed properties that have yet to come to market. In Florida, for example, it took a whopping 806 days (the national average was 348) for a lender to foreclose on a home at the end of 2011.

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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