It looks like our nation’s home builders will continue to face some stiff competition from foreclosed homes in the marketplace. The latest U.S. Foreclosure Market Report from RealtyTrac, the online marketplace for foreclosure properties, reveals that foreclosure filing activity continued unabated in April.
“Total foreclosure activity in April ended up slightly above the previous month, once again hitting a record-high level,” said James J. Saccacio, CEO of RealtyTrac, in a prepared release. “Much of this activity is at the initial stages of foreclosure — the default and auction stages — while bank repossessions, or REOs, were down on a monthly and annual basis to their lowest level since March 2008. This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria. It’s likely that we’ll see a corresponding spike in REOs as these loans move through the foreclosure process over the next few months.”
According to RealtyTrac statistics, foreclosure filings were reported on 342,038 U.S. properties during the month, an increase of less than 1 percent from the previous month and an increase of 32 percent from April 2008. The report also shows that in April, one in every 374 U.S. housing units received a foreclosure filing. RealtyTrac says it’s the highest monthly foreclosure rate posted since they started issuing reports on foreclosures in January 2005.
Foreclosures not only add to the inventory of available homes, they have also been depressing prices, according to National Association of Realtors (NAR) Chief Economist Lawrence Yun.
“In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data,” Yun remarked in NAR’s most recent release on existing home sales activty. “We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other. In many cases homes are selling below replacement construction costs, which speaks to great value in the current market.”
The latest survey from NAR shows:
The national median existing single-family price was $169,000, which is 13.8 percent below the first quarter of 2008 when conditions were closer to normal, NAR reports, also pointing out that distressed homes typically were selling for 20 percent less than traditional homes and have been downwardly skewing median prices.
This situation does not bode well for home builders who are still struggling to maintain fair value on their newly built homes, especially in markets hardest hit by foreclosures.
Nevada, Florida, California Lead Nation in Foreclosure Rates
RealtyTrac reported that Nevada currently has the unenviable distinction of having nation’s highest state foreclosure rate, despite an 18 percent decrease in March foreclosure activity. Nevada beat the national average more than five-fold, and total foreclosure activity in Nevada was up an eye-opening 111 percent from April 2008.
Florida placed second highest in foreclosures among all states in April with a 37 percent month-over-month increase in activity. RealtyTrac identified default and auction notices as the main culprit behind Florida’s monthly increase. However, bank repossessions were down 7 percent from the previous month. Total foreclosure activity in Florida was reported to be up 75 percent from April 2008.
Even though California’s April foreclosure rate had decreased 10 percent from the previous month, it was still third highest in the nation and was up 42 percent from April 2008.
Arizona has the fourth highest state foreclosure rate in April, with Idaho coming in with the fifth highest state foreclosure rate.
Other states with foreclosure rates ranking among the nation’s 10 highest were Utah, Georgia, Illinois, Colorado and Ohio — although the foreclosure rates in Illinois, Colorado and Ohio were below the national average, RealtyTrac notes.
Top 10 States Account for more than 75 percent of Total U.S. Foreclosure Activity
According to RealtyTrac, the 10 states with the most properties with foreclosure filings in April accounted for more than 75 percent of the national total. California has the highest total (96,560), followed by Florida (64,588), Nevada (16,266) and Arizona (16,245).
Foreclosure filings were reported on 13,647 Illinois properties in April, the nation’s fifth highest state total. Illinois foreclosure activity decreased 11 percent from the previous month but was still up 54 percent from April 2008. Other states with totals among the 10 highest in the country were Ohio (12,324), Georgia (11,521), Texas (11,314), Michigan (10,830) and Virginia (6,254).
Las Vegas Tops the Metro Foreclosure Rate
Foreclosure filings were reported on 14,073 Las Vegas properties in April, a 20 percent decrease from the previous month, but the city continued to post the highest foreclosure rate among metro areas with a population of at least 200,000, RealtyTrac reports. One in every 56 Las Vegas housing units received a foreclosure filing during April — nearly seven times the national average.
The Cape Coral-Fort Myers, Fla., metro area posted the second highest foreclosure rate in April, with one in every 57 housing units receiving a foreclosure filing during the month. Foreclosure activity increased 31 percent from the previous month in Cape-Coral-Fort Myers. Two other Florida metro areas also documented foreclosure rates in the top 10: Miami at No. 9 and Orlando at No. 10.
With one in every 65 housing units receiving a foreclosure filing, Merced, Calif., posted the nation’s third highest metro foreclosure rate. Five other California metro areas also documented foreclosure rates in the top 10: Modesto at No. 4, Riverside-San Bernardino at No. 5, Bakersfield at No. 6, Vallejo-Fairfield at No. 7, and Stockton at No. 8, according to the RealtyTrac report.