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.