Report: Foreclosures Down, But Discounts Abound

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foreclosuresLOS ANGELES -- Foreclosures made up a smaller slice of all U.S. homes sold in last year's third quarter, as banks delayed placing properties for sale and home sales slowed.

Despite the decline, foreclosures still represented 20 percent of all homes sold in the July-September period -- about four times more than at the height of the housing boom, foreclosure listing firm RealtyTrac Inc. said Thursday.

Foreclosure sales include homes purchased after they received a notice of default or were repossessed by lenders.

In 2005 and 2006, when housing was still flying high, foreclosures made up less than 5 percent of all home sales, the firm said. They peaked in 2009 at 37.4 percent.

As a portion of all homes purchased, foreclosure sales declined in the third quarter from 22 percent in the April-June period. They were down from 30 percent in the third quarter of 2010, RealtyTrac said.

Sales of all previously occupied homes rose in August, but fell in July and September, according to the National Association of Realtors. Sales of new homes, which account for less than 10 percent of the housing market, fell in July and August, but rose in September.

Robo-Signing's Shadow

Ongoing disputes over how some lenders handled foreclosures have been a key factor in foreclosed homes' declining share of all home sales.

In the fall of 2010, some banks and mortgage servicers were found to have been signing off on home foreclosures without first verifying documents, a practice dubbed "robo-signing." That sparked a state and federal probe and prompted many lenders to revisit their foreclosure procedures. Many also delayed taking action against homeowners behind on their mortgage payments.

The delays coupled with uncertainty over the outcome of negotiations to settle the banking-industry probe have led to fewer foreclosed homes being put up for sale.

But housing industry experts say they anticipate that will change swiftly once the investigations are resolved. They note the glut of bank-owned homes and others already in some stage of foreclosure.

"As the foreclosure industry gets clarity on the foreclosure process, they will be able to push more of these foreclosures to sale," said Daren Blomquist, a vice president at RealtyTrac.

As of Dec. 31, there were more than 680,000 U.S. homes owned by banks and another 715,000 in some stage of foreclosure, Blomquist said.

All told, 221,536 bank-owned homes and others in the foreclosure process were sold in 2011's third quarter. That's down 11 percent from the second quarter and down 5 percent from the third quarter of 2010.

Foreclosures, often in need of repair, typically sell at big discounts and weaken prices for neighboring homes.

The Foreclosure Discount

Homebuyers who purchased a foreclosure in the third quarter paid an average of $165,322, representing a discount of 34 percent from the average sale price of all other homes, RealtyTrac said.

The discount was unchanged from the April-June quarter, but declined from 37 percent in the third quarter of 2010.

Bank-owned homes, which are sold after being repossessed, accounted for nearly 12 percent of all sales in the third quarter. Sales of homes in the foreclosure process -- properties in default or scheduled for auction -- made up about 9 percent of all sales.

Nevada led all states with foreclosure sales accounting for nearly 57 percent of all home sales, RealtyTrac said.

Several other states had foreclosure sales that made up at least 20 percent of all homes purchased in the third quarter: California, Arizona, Georgia, Colorado and Michigan.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

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Report: Foreclosures Down, But Discounts Abound

Quarterly increase in foreclosures: +32%
# of Foreclosures Q3 2011: 2,273
Unemployment: 7.6%
% home value down from peak: -12.42%

Columbus hit its median home value peak in the first quarter of 2006. Since that time, home values have declined a relatively modest 12.4%, including a 3.4% drop last year. By the second quarter of 2012, Fiserv projects that homes in the area will lose another 2.3% of their value. Median family income in Columbus is above the national average, and unemployment is just 8%, a full percentage point less than the national average. Despite the fact that things don’t look so bad for the Columbus housing market compared to other regions, the city foreclosure rate still increased by 32% last quarter. A total of 2,273 homes were foreclosed upon during that time.

See foreclosed homes for sale in Columbus, Ohio

Quarterly increase in foreclosures: +35%
# of Foreclosures Q3 2011: 1,743
Unemployment: 11.2%
% home value down from peak: -59.3%

There is arguably no single housing market with a worse long-term outlook than southwest Florida, and the Cape Coral-Fort Myers region is the worst of these. Housing prices in the have already dropped 59.3% from their peak, and Fiserv project them to decline another 12.2% by the second quarter of next year. According to Corelogic, 47% of the homes in the Cape Coral-Fort Myers area are worth less than their mortgages because of declining values. Foreclosures have increased 35% in the last quarter, and with no sign of recovery in the immediate future that trend may worsen in the coming months.

See foreclosed homes for sale in Fort Myers, Fla.

Quarterly increase in foreclosures: +36%
# of Foreclosures Q3 2011: 1,348
Unemployment: 11%
% home value down from peak: -59.1%

As of last month, Vallejo-Fairfield had the second-highest foreclosure rate in the country, with one out of every 51 homes being foreclosed upon in the third quarter of this year. This was a 36% increase in foreclosures from the second quarter. Home values have dropped 7.5% in the past year and are projected by Fiserv to drop an additional 4.9% by the second quarter of 2012. A remarkable 53% of homes in the region are worth less than their mortgages. This is the seventh highest rate of homes with underwater mortgages in the country.

See foreclosed homes for sale in Fairfield, Calif.

Quarterly increase in foreclosures: +41%
# of Foreclosures Q3 2011: 2,174
Unemployment: 14.9%
% home value down from peak: -54%

Fresno’s economy has continued to suffer since housing prices began to drop in 2006. It currently has an unemployment rate of 14.9%, which is one of the highest in the country. Home prices peaked in the first quarter of 2006 and have been decreasing since. The metropolitan area also has one of the highest underwater mortgage rates in the country, with a negative equity share of nearly 46%. In the last year alone home prices have dropped 11%.

See foreclosed homes for sale in Fresno, Calif.

Quarterly increase in foreclosures: +44%
# of Foreclosures Q3 2011: 1,039
Unemployment: 11.6%
% home value down from peak: -53.4%

More than 1,000 homes were foreclosed upon in the Palm Bay-Melbourne-Titusville region last quarter, a 44% increase from the previous three-month period. Nearly half of the region’s homes are worth less than their mortgages. With Fiserv projecting home values would drop 7.1% by next year and another 4.9% the year after that, things may just get even worse.

See foreclosed homes for sale in Titusville, Fla.

Quarterly increase in foreclosures: +49%
# of Foreclosures Q3 2011: 2,559
Unemployment: 9.5%
% home value down from peak: -39.3%

Jacksonville has experienced a quarterly increase in foreclosures of nearly 50%. Home prices have dropped 39.1% since their peak in the second quarter of 2006. The metropolitan area’s negative equity share also exceeds 46%, making it among the worst in the country for underwater mortgages. Home prices are expected to decrease another 10.7% by the second quarter of 2012.

See foreclosed homes for sale in Jacksonville, Fla.

Quarterly increase in foreclosures: +55%
# of Foreclosures Q3 2011: 1,956
Unemployment: 8.7%
% home value down from peak: -15.9%

Nearly 2,000 homes were foreclosed upon during the last quarter, a 55% increase from the previous three months. Unlike many of the regions on this list with accelerating home foreclures, Cincinnati’s local economy is doing fairly well. Home prices are only down 15.9% from their peak in the first quarter of 2006. Unemployment and median family income are both better than average. One possible explanation for this recent increase may be that nearly a third of the total decline in home value since the peak has occurred in the past 12 months.

See foreclosed homes for sale in Cincinnati, Ohio

Quarterly increase in foreclosures: +57%
# of Foreclosures Q3 2011: 1,673
Unemployment: 11%
% home value down from peak: -51.4%

The Sarasota-Bradenton-Venice metropolitan area has seen the third largest increase in the country in foreclosures in the third quarter. However, only 1,673 homes out of the 311,475 on the market were foreclosed upon. The housing market has suffered a great deal since housing prices peaked in the first quarter of 2006. Since then, overall home prices have dropped 51.4%.

See foreclosed homes for sale in Venice, Fla.

Quarterly increase in foreclosures: +67%
# of Foreclosures Q3 2011: 2,003
Unemployment: 6.6%
% home value down from peak: -15.8%

The Boston metropolitan area is considered to have a particularly resilient housing market. In the most recent quarter, however, foreclosures have increased 67%. Home prices have only dropped 15.8% since they peaked in the third quarter of 2005. The national average is -32.3%. From the second quarter of 2010 to the second quarter of 2011, home prices dropped a mere 1.7%.

See foreclosed homes for sale in Boston, Mass

Quarterly increase in foreclosures: +151%
# of Foreclosures Q3 2011: 1,358
Unemployment: 6.9%
% home value down from peak: -14.9%

Albuquerque’s housing market, like Boston’s, is relatively healthy. While home prices decreased 32.3% nationally after their peak, home prices in Albuquerque only decreased 14.9% since they peaked. Regardless, foreclosures have recently skyrocketed. In the third quarter of 2011, the number of foreclosures in Albuquerque increased 151%. According to New Mexico Business Weekly, the lack of job creation in the area has been a major contributor to this problem.

See foreclosed homes for sale in Albuquerque, N.M.

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