Foreclosures: Default Notices Down, Repossessions Up
Overall, 325,229 properties -- a nearly 4 percent increase from June -- received some type of foreclosure filing, which includes default notices, scheduled auctions and bank repossessions. One in every 397 U.S. housing units got a foreclosure filing last month. We've now seen 17 months of foreclosure activity exceeding 300,000 based on RealtyTrac's numbers.
These record numbers of foreclosures are continuing to wreak havoc on the real estate market for everyone. in fact, Trulia.com found that one in four home sellers nationwide had to cut their list price to attract buyers. Until the number of foreclosures subside, there will be downward pressure on home prices.
"With one out of every four homes experiencing at least one price reduction, sellers are feeling no relief this summer, in a market climate of fewer qualified buyers and widespread uncertainty about the job market," said Pete Flint, cofounder and CEO of Trulia. "I stated at the beginning of the year that I did not expect to see the housing market stabilize or recover in 2010, and I believe that prediction is being proven true today. We will be bouncing around the bottom for months to come."
Five states continue to account for more than 50 percent of the national total of properties receiving some type of foreclosure notice: California (66,910), Florida (51,557), Illinois (19,602), Michigan (18,833) and Arizona (16,298). Others in the top 10 in July include Nevada (13,727), Ohio (13,511), Georgia (12,577), Texas (11,727) and Maryland (6,961).
Nevada housing units received a foreclosure notice in July. The good news is that while the number of housing units that received a foreclosure filing was 13,727, that's a 30 percent decrease from July 2009. Nevada turned the corner about 10 months ago when year-over-year foreclosure activity began decreasing.
Arizona also has seen a decrease in foreclosure activity on a year-over-year basis for the sixth straight month, but it still has the nation's second highest state foreclosure rate. One in every 167 Arizona housing units received a foreclosure filing during the month, which is more than twice the national average.
In Florida, one in every 171 housing units received a foreclosure filing in July, which places its foreclosure rate third in the nation. The fourth highest is California, with one in every 200 housing units receiving a foreclosure filing in July. Foreclosure activity in Idaho increased nearly 19 percent from the previous month, boosting the state's foreclosure rate to fifth highest among all the states. One in every 240 Idaho housing units received a foreclosure filing in July. Other states with foreclosure rates ranking among the top 10 in July were Michigan, Utah, Illinois, Georgia and Maryland.
While the good news is that new defaults are slowing, which means we will see numbers of repossessions drop dramatically in about a year, the fact that it takes on average more than a year to foreclose on a home means that there are still hundreds of thousands waiting for the news that their homes are lost. As bank repossessions continue at the rate of more than 100,000 (135,248 in July) per month, pressures on home prices will keep prices low for everyone in the hard-hit states. But there is good news even in the auction arena. The number of scheduled auctions was down 14 percent from its peak of 158,105 in March 2010.
So don't expect a quick fix to the housing meltdown, but do realize that we're starting to see the light at the end of the tunnel.
Lita Epstein has written more than 25 books, including "The 250 Questions Everyone Should Ask About Buying a Foreclosure."
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