RealtyTrac®, a leading online marketplace for foreclosure properties, recently released its U.S. Foreclosure Market Report™ for May 2012, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions—were reported on 205,990 U.S. properties in May, an increase of 9 percent from April but still down 4 percent from May 2011. The report also shows one in every 639 U.S. housing units with a foreclosure filing during the month.
“U.S. foreclosure activity has now decreased on a year-over-basis for 20 straight months including May, but the jump in May foreclosure starts shows that it’s going to be a bumpy ride down to the bottom of this foreclosure cycle,” says Brandon Moore, CEO of RealtyTrac. “Based on the rise in pre-foreclosure sales we’ve seen so far this year, a higher percentage of these new foreclosure starts will likely end up as short sales or auction sales to third parties rather than bank repossessions going forward. While pre-foreclosure sales have less of a negative impact on home values than bank-owned sales, they still represent a discounted sale where a distressed homeowner is losing his or her home.
“Disposing of distressed homes by pre-foreclosure sale can also benefit lenders and servicers because pre-foreclosure homes sell at a higher average price point than bank-owned homes,” Moore continues. “Our first quarter foreclosure sales report showed that the average price of a pre-foreclosure home was more than $27,000 higher than the average price of a bank-owned home—which quickly adds up given that there have been an average of 1.6 million nationwide foreclosure starts per year for the past five years.
“More banks are now recognizing that treating the problem of delinquent mortgages with short sales rather than bank repossessions can help them minimize their losses and also avoid taking on more REOs, which they then have to manage, maintain and market for sale.”
High-level findings from the report:
•Foreclosure activity rose back up above the 200,000 level in May after two consecutive months below 200,000.
•Foreclosure starts nationwide increased on an annual basis after 27 consecutive months of year-over-year declines.
•Judicial states combined posted a 26 percent year-over-year increase in overall foreclosure activity while non-judicial states combined posted a 20 percent year-over-year decrease in foreclosure activity.
•Foreclosure starts increased on a year-over-year basis in 17 of the 26 judicial states and in 16 of the 24 non-judicial states.
•Georgia leapfrogged past Arizona, Florida, California and Nevada to post the nation’s highest state foreclosure rate in May, the first time since February 2006 that Georgia’s foreclosure rate has ranked highest among the states.
Foreclosure starts increase 12 percent to highest level since October 2011
Foreclosure starts — default notices or scheduled foreclosure auctions, depending on the state—were filed on 109,051 U.S. properties in May, a 12 percent increase from April and a 16 percent increase from May 2011.
Foreclosure starts increased annually in 33 out of the 50 states—17 states with the judicial process and 16 states with the non-judicial process. States with some of the biggest annual increases in foreclosure starts included the judicial foreclosure states of New Jersey (118 percent), Pennsylvania (97 percent), Florida (83 percent), Massachusetts (60 percent), New York (59 percent), South Carolina (43 percent), Ohio (32 percent) and Illinois (28 percent), and the non-judicial foreclosure states of Tennessee (165 percent), Texas (51 percent), Missouri (35 percent), Georgia (30 percent), and Michigan (24 percent).
Bank repossessions increase from previous month, still down from year ago
After three straight monthly decreases to a 49-month low in April, bank repossessions (REOs) increased 7 percent on a monthly basis in May. Lenders completed the foreclosure process on 54,844 U.S. properties during the month, still down 18 percent from May 2011.
REO activity increased on an annual basis in 17 states in May, including North Carolina (66 percent), Illinois (65 percent), Massachusetts (59 percent), Florida (32 percent), Georgia (31 percent), and Ohio (26 percent).
States with annual decreases in REO activity included Nevada (68 percent), Arizona (43 percent), Michigan (42 percent), Colorado (42 percent), California (27 percent), Minnesota (24 percent), and Indiana (17 percent).
Georgia posts highest state foreclosure rate for first time since February 2006
Georgia foreclosure activity in May increased 33 percent from the previous month and 30 percent from a year ago, helping the state post the nation’s highest foreclosure rate for the month—one in every 300 housing units with a foreclosure filing. Georgia’s foreclosure rate leapfrogged the foreclosure rates in Arizona, Florida, California and Nevada, all of which posted higher foreclosure rates than Georgia in the previous month.
After dropping to a 53-month low in April, Arizona foreclosure activity bounced 24 percent higher in May, helping the state document the nation’s second highest foreclosure rate for the month—one in every 305 housing units with a foreclosure filing. Arizona foreclosure activity for the month was still down 29 percent from May 2011.
Despite a 66 percent drop in foreclosure activity compared to a year ago, Nevada documented the nation’s third highest state foreclosure rate in May—one in every 313 housing units with a foreclosure filing.
California foreclosure activity decreased 19 percent from May 2011, but the state still posted the nation’s fourth highest foreclosure rate for the month—one in every 324 housing units with a foreclosure filing.
Illinois foreclosure activity increased 54 percent from May 2011 and the state documented the nation’s fifth highest foreclosure rate (one in every 325 housing units), while Florida foreclosure activity increased 38 percent from May 2011 and the state documented the nation’s sixth highest foreclosure rate (one in every 340 housing units).
Other states with foreclosure rates ranking among the top 10 were Ohio (one in 495 housing units with a foreclosure filing), Michigan (one in 519), South Carolina (one in 539), and Utah (one in 592).
Riverside, Atlanta, Phoenix post top foreclosure rates among 20 largest metros
The Riverside-San Bernardino metro in Southern California posted the highest foreclosure rate among the nation’s 20 largest metropolitan statistical areas by population. One in every 179 housing units in the Riverside-San Bernardino metro had a foreclosure filing in May—more than 3.5 times the national average.
With one in every 224 housing units with a foreclosure filing, Atlanta posted the second highest foreclosure rate among the 20 largest metro areas, and with one in every 245 housing units with a foreclosure filing, Phoenix posted the third highest foreclosure rate.
A 56 percent year-over-year increase in foreclosure activity helped boost Chicago’s foreclosure rate to fourth highest among the 20 largest metro areas, and a 111 percent year-over-year increase in foreclosure activity helped the Tampa-St. Petersburg-Clearwater metro area document the fifth highest foreclosure rate among large metro areas.
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