RealtyTrac's first quarter 2013 foreclosure report shows that, not surprisingly, the real estate market in the United States is still struggling, particularly in some markets. With one in every 296 housing units in foreclosure, we can see that the problems in the American real estate market are still not over even though some markets are showing growing signs of strength.
Overall, in the first three months of 2013, there were foreclosure filings on 442,117 properties, down 12 percent from the previous quarter and down 23 percent on a year-over-year basis. That's the good news. RealtyTrac notes that, while the trends are heading lower, some markets are seeing the wearing-off of the effects of foreclosure prevention efforts. This means that there could be an "outbreak" of foreclosures down the road in states where aggressive foreclosure efforts are currently in place. As I'll note below, some states are still suffering from horrific rates of foreclosure that are far in excess of the national average.
While, in general, things on the foreclosure front seem to be improving, foreclosure starts were up two percent from February to March, the second straight month of increases. March alone saw 152,500 foreclosure filings including default notices, bank repossessions and auctions with 73,113 foreclosure starts. Foreclosure starts were up on a month-over-month basis in 23 states and were up in 12 states on a year-over year basis. New York suffered the largest year-over-year increase with starts up 200 percent. Maryland was in second place with an increase of 193 percent and Washington was up 154 percent.
In March, lenders repossessed "only" 43,597 properties across the United States, the lowest level since September 2007. Bank repossessions or REOs were down nationally by 21 percent on a year-over-year basis, however, on an annual basis, Arkansas saw REOs rise by 121 percent, Maryland saw REOs rise by 114 percent and Washington saw REOs rise by 88 percent.
The time taken for lenders to foreclose has risen markedly over the past year, hitting a new high since this metric was first measured in 2007; it now takes an average of 477 days to complete foreclosure processes, up from 414 days during the last quarter of 2012 and 370 days in the first quarter of 2012. The average time to foreclose increased the most in Oregon which was up 61 percent from quarter-to-quarter, Arkansas which was up 42 percent and Texas which was up 40 percent. Here is a graph showing how the time to foreclose has changed for five states since 2007:
It's interesting to see the spread; in Texas, it only takes a lender 159 days to complete a foreclosure and it takes a whopping 1049 days (two months short of three years) for a lender to complete a foreclosure in New York.
Which states are still seeing the highest foreclosure rates?
1.) Florida - A total of 85,671 properties had foreclosure filings; this works out to one in every 104 housing units (the national average is one in every 296 units as noted above). Foreclosure activity in Florida rose by 17 percent on a quarter-over-quarter basis. Lucky Florida accounts for seven of the ten highest metropolitan foreclosure rates in the nation; Miami has the highest metro foreclosure rate with one in every 79 housing units having a foreclosure filing.
2.) Nevada - Foreclosure activity increased by 13 percent on a quarter-over-quarter basis but fell by 19 percent from a year ago. One in every 115 housing units in the state currently has a foreclosure filing. Foreclosure starts in March were up 88 percent on a year-over-year basis. Las Vegas has the nation's fourth highest metropolitan foreclosure rate at one in every 99 housing units.
3.) Illinois - Foreclosure activity decreased 2 percent on a quarter-over-quarter basis and was also down 5 percent on a year-over-year basis, however, one in every 147 housing units in the state had a foreclosure filing in the first quarter of 2013. Rockford has the nation's sixth highest foreclosure rate at one in every 102 housing units and Chicago has the nation's ninth highest foreclosure rate at one in every 116 housing units.
Now, let's look at the big picture. Here's a bar graph showing the number of annual foreclosures since the real estate crisis began in 2007:
Just for fun, here's a look at what happened to American foreclosures from just after the Great Depression to the mid-1960s:
It is interesting to see that it took nearly a decade for the number of foreclosures to fall as the Great Depression ground on. With the economic recovery barely chugging along since the end of the Great Recession, it will be interesting to see how long it takes for the number of foreclosures in the U.S. to drop back to pre-recession levels.