Wednesday, February 19, 2014

The American Foreclosure Dilemma - January 2014

RealtyTrac's latest foreclosure data provides us with an interesting glimpse into the current state of the housing market in America, particularly in one key state.

Overall, there were 124,419 foreclosure filings in January 2014, marking the 40th consecutive month that America's foreclosure activity declined, however, the 18 percent year-over-year decline was the smallest annual decline since September 2012.  The data shows that one in every 1058 homes in the United States had a foreclosure filing during the month of January, still a shocking number.  Surprisingly, foreclosure activity in January increased 8 percent on a month-over-month basis, the largest month-over-month increase since May 2012.  

When looking at the foreclosure data on a state-by-state basis, we see that there are extremes, with some states strongly counter to the improving national trend.  States with the highest foreclosure rates in January 2014 include Florida, Nevada, Maryland, Illinois and New Jersey as shown on this map:

In Florida, one in every 344 homes is in the foreclosure process and in Nevada, one in every 529 homes is in the foreclosure process.

Some states also showed very high year-over-year increases in foreclosure starts as shown here:

Maryland - up 126 percent
Connecticut - up 82 percent
New Jersey - up 79 percent
California - up 57 percent
Pennsylvania - up 39 percent

Foreclosure activity reached a 40 month high in New Jersey, however, California showed a very substantial increase in foreclosure starts from a year ago as shown on this graph:

Foreclosure auctions were also up significantly on a year-over-year basis in some states as shown here:

Oregon - up 326 percent
Connecticut - up 223 percent
Maryland - up 113 percent
New York - up 73 percent
Nevada - up 73 percent

Foreclosure auctions in New York were at the highest monthly level since October 2010 and in Nevada, were at the highest level since February 2012.

Bank repossessions (REO) were also up significantly in some states as shown here: 

New York - up 118 percent
Oklahoma - up 93 percent
Connecticut - up 75 percent
New Jersey - up 26 percent
Maryland - up 11 percent.

Bank repossessions in New York (514 in January) hit a level not seen since September 2010.

While there is no doubt that America's real estate market is "healing" as prices begin to rise in some hard-hit markets, it is interesting to see that the real estate market in some states, particularly those in the southwest, south and industrial heartland are still not particularly healthy when measured in terms of foreclosures.  The rising number of new foreclosures in some states will also make it increasingly difficult for some markets as soon-to-be vacant homes put downward pressure on prices.

1 comment:

  1. Calling the home buying we have seen in both the new and existing markets "pent up demand" may be a stretch, many houses still remain empty or under leased, this means the occupants are not fulfilling their obligations. With population growth slowing, values changing, and slightly more occupants per home, less houses will be needed. Some of what we are currently witnessing is a repositioning and refinancing at historically low rates. In coming quarters do not expect housing to lift the GDP as much as it has recently in coming quarters. The post below goes on to question the logic of rushing to buy a house.