RealtyTrac released its Q1 and March 2016 U.S. Foreclosure Market Report, which shows first quarter foreclosure activity was below pre-recession levels in 78 out of 216 U.S. metropolitan statistical areas (36 percent) analyzed in the report.
Nationwide, the report shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 289,116 U.S. properties in the first quarter of 2016, down 4 percent from the previous quarter and down 8 percent from the first quarter of 2015 to the lowest quarterly total since the fourth quarter of 2006, a more than nine-year low.
“Despite a seasonal bump higher in March, foreclosure activity in most markets continues to trend lower and back toward more healthy, stable levels,” said Daren Blomquist, senior vice president at RealtyTrac. “More than one-third of the 216 local markets we analyzed were below their pre-recession foreclosure activity averages in the first quarter, and we would expect a growing number of markets to move below that milestone the rest of this year — while the number of markets with a lingering low-grade fever of foreclosure activity continues to shrink.”
Markets below pre-recession levels in Q1 2016
Nationwide, the 289,116 properties with foreclosure filings in the first quarter was still 4 percent higher than the pre-recession quarterly average of 278,912 properties with foreclosure filings from Q1 2006 through Q3 2007.
Among 216 metropolitan statistical areas with a population of at least 200,000, a total of 78 (36 percent) posted Q1 2016 foreclosure activity below pre-recession average levels, including Los Angeles (27 percent below pre-recession average); Dallas (65 percent below pre-recession average); Houston (64 percent below pre-recession average); Miami (19 percent below pre-recession average); and Atlanta (57 percent below pre-recession average).
Markets above pre-recession levels in Q1 2016
There were still 138 of the 216 major metro areas (64 percent) with Q1 2016 foreclosure activity above pre-recession average levels, including New York (80 percent above pre-recession average); Chicago (17 percent above pre-recession average); Philadelphia (97 percent above pre-recession average); Washington, D.C. metro (134 percent above pre-recession average); and Boston (46 percent above pre-recession average).
97 percent of markets below peak foreclosure activity levels in Q1 2016
Nationwide the 289,116 properties with foreclosure filings in the first quarter of 2016 was 69 percent below the quarterly peak of 937,840 properties with foreclosure filings in the second quarter of 2009.
Among the 216 major metro areas analyzed for the report, 210 (97 percent) were below peak foreclosure activity levels in the first quarter of 2016. Markets furthest below the previous peak were Merced, California (95 percent below peak), followed by six markets all with Q1 2016 foreclosure activity 93 percent below peak levels: Boulder, Colorado; Fayetteville, Arkansas; Cape Coral-Fort Myers, Florida; Stockton, California; Denver, Colorado; and Phoenix, Arizona.
“The Seattle housing market has benefitted from a robust economy, which when combined with the growth of home prices, has led to a slowdown in foreclosure activity,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, where Q1 2016 foreclosure activity was down 14 percent year-over-year and down 74 percent from the peak in Q3 2010. “Given the stringent process to qualify for a mortgage, as well as the greater down payment requirements, there is very little risk of an increase in foreclosure activity in the near term.”
3 percent of markets reach new foreclosure activity peak in Q1 2016
Among the 216 metro areas analyzed for the report, six (3 percent) reached new foreclosure activity peak levels in the first quarter of 2016: Syracuse, New York; Kingsport, Tennessee; Utica-Rome, New York; Binghamton, New York; College Station, Texas; and Tuscaloosa, Alabama.
Maryland, New Jersey, Nevada post highest state foreclosure rates in Q1 2016
One in every 459 U.S. housing units had a foreclosure filing in the first quarter of 2016. States with the top five highest foreclosure rates were Maryland (one in every 194 housing units with a foreclosure filing); New Jersey (one in every 216 housing units); Nevada (one in every 236 housing units); Delaware (one in every 240 housing units); and Florida (one in every 274 housing units.
Other states posting top 10 foreclosure rates in the first quarter of 2016 were Illinois, Ohio, South Carolina, Indiana, and Pennsylvania.
Atlantic City, Trenton, Baltimore post highest metro foreclosure rates in Q1 2016
Among the 216 metropolitan statistical areas with a population of at least 200,000, those with the five highest foreclosure rates in the first quarter of 2016 were Atlantic City, New Jersey (one in every 106 housing units with a foreclosure filing); Trenton, New Jersey (one in every 168 housing units); Baltimore, Maryland (one in every 183 housing units); Lakeland-Winter Haven, Florida (one in every 196 housing units); and Rockford, Illinois (one in every 211 housing units).
Other metro areas posting top 10 foreclosure rates in the first quarter of 2016 were Las Vegas, Tampa, Fayetteville, North Carolina, Philadelphia, and Jacksonville, Florida.
48 percent of markets post annual increase in foreclosure activity in Q1 2016
Despite the nationwide decrease in foreclosure activity in the first quarter, 103 of the 216 metro areas analyzed in the report (48 percent) posted a year-over-year increase in foreclosure activity. Among the nation’s 20 largest metro areas, those with the biggest annual increase in foreclosure activity were Boston (up 49 percent); Philadelphia (up 18 percent); Phoenix (up 10 percent); Baltimore (up 9 percent); and New York (up 7 percent).
March foreclosure activity up month-over-month, still down from year ago
There were a total of 108,970 U.S. properties with foreclosure filings in March, an 11 percent increase from February to the highest monthly level since October 2015 — but still down 11 percent from a year ago.
March foreclosure starts increase from a year ago in 20 states
The monthly increase in March was driven by a jump in pre-foreclosure notices: foreclosure starts and scheduled foreclosure auctions. Foreclosure starts — the first public notice starting the foreclosure process — increased 21 percent from the previous month but were still down 11 percent from a year ago.
March foreclosure starts increased from a year ago in 20 states, including Connecticut (up 169 percent), Arizona (up 125 percent), Delaware (up 78 percent), Iowa (up 64 percent), and Massachusetts (up 51 percent).
“While overall foreclosures closed across Ohio remain on the decline, showing positive housing and job growth in the state, there was a modest increase in foreclosure starts during first quarter of 2016 that could likely relate to many homeowners not recognizing the increased value and appreciation they have earned in many communities across Ohio,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio, where foreclosure starts increased 18 percent year-over-year statewide in March. “If a homeowner finds themselves falling behind in mortgage payments due to health, divorce, or job loss, consulting a Realtor should be their first discussion in learning options available to assist them in potentially avoiding a foreclosure action.”
March scheduled foreclosure auctions increase from a year ago in 23 states
Scheduled foreclosure auctions — which in some states act as the foreclosure start — increased 25 percent month-over-month nationwide, but were still down 15 percent from a year ago. Scheduled foreclosure auctions increased 18 percent month-over-month in non-judicial foreclosure states and increased 17 percent in judicial states.
March scheduled foreclosure auctions increased from a year ago in 23 states, including Massachusetts (up 211 percent), New York (up 92 percent), Pennsylvania (up 49 percent), Maryland (up 43 percent), and South Carolina (up 37 percent).
“Over the last 10 years, U.S. foreclosure activity on average has increased 6 percent from February to March, and the 11 percent increase this year was not far off that typical seasonal bump,” noted Blomquist. “February is of course a shorter month, and banks often ramp up foreclosure filings in March to take advantage of the spring selling season — which should prove particularly favorable to banks this year given low inventory levels of homes for sale and continued strong demand from buyers regaining confidence in the housing market.
About The Author
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at firstname.lastname@example.org.