A new report from RealtyTrac showed that April foreclosure numbers decreased annually for the first time since 2005. Daren Blomquist is the managing editor of the RealtyTrac foreclosure news report. For this episode of In This Corner, he says while the new record is good news, there is still a lot of work to be done.
Is there a finish-line in sight on the foreclosure crisis? The industry feels like it’s been running a marathon. What would be the road signs to let it know it’s close?
I think the year-over-year decrease in national foreclosure activity in April is a definite sign that there is an end in sight, but on the other hand the record REO numbers show that we’ve got a lot of backlogged inventory stopped up in the foreclosure process that needs to be cleared before we can return to a balanced, healthy market.
What markets are heading in the right direction, and which are lagging behind?
Many markets in California appear to be headed in the right direction, with decreasing foreclosures, particularly in the Notice of Default category. We’ve seen five consecutive months of year-over-year declines in California, including April. We saw six straight months of year-over-year declines in Nevada through March, and the April numbers were down less than 1%, so that’s another state I would say is headed in the right direction. Arizona has seen three straight months of year-over-year declines, although the decline in March was less than 1%, and New York has also seen three straight months of year-over year declines.
Florida may be lagging behind that trend a bit. We saw a year-over-year decline in April, but year-over-year increases in the previous five months.
Georgia has seen five straight months of year-over-year increases after a decline in November, as has Colorado. Colorado was actually looking on the right track for much of 2009, when it posted year-over-year declines in seven of 12 months and dropped out of the top-10 foreclosure rates for much of the year. But it was back in the top 10 in March and April this year.
Hawaii has also been flirting with the top 10 over the past few months. It was tenth in December and eleventh in April. Hawaii has seen 35 straight months of year-over-year increases in foreclosure activity. Similarly Utah has seen 30 straight months of year-over-year increases and has consistently ranked in the top 10 over the past year.
The sand states still hold such a majority of the foreclosures. What has led to the disparity?
Actually, of the top five states with the most foreclosure activity in terms of raw numbers, three are sand states (California, Florida, Arizona) but two are Rust Belt states (Illinois, Michigan). However, the sand states definitely dominate the top-five foreclosure rates and we believe that because the housing bubble was most inflated in those states, leading to many real estate transactions (both purchases and re-financings) during the bubble and highly susceptible to foreclosure when the bubble collapsed.
From what you’re seeing, are foreclosures outpacing modifications?
Yes. We’ve seen at least 250,00 properties receive a default notice or be scheduled for public foreclosure auction each month over the past year, and I believe the most recent permanent modifications number I’ve seen is 230,000 total.
RealtyTrac has become the brand-name in foreclosure data during the current crisis. You’re just short of Coca-Cola. What new data sets or processes is the company working on to give the industry even more insight?
We’re working on a foreclosure sales report for sometime in the next month or two that will show what percentage of sales are sales of properties in some stage of the foreclosure process and the average discount on a foreclosure purchase, among other things.
We’re also working on a report that will show the average time it takes to foreclose on a property on a state-by-state and even county-by-county basis. We’re also considering a report that would focus on commercial foreclosures.