Foreclosure filing trends

Nationwide, the number of unique U.S. properties that received a foreclosure filing last year fell 3 percent to more than 1.83 million from 1.9 million in 2011, and decreased 36 percent from 2.9 million in the 2010 peak year.

Listening to or reading the national news can give Floridians a misleading impression of the relative health of the housing market. All of the recent stories have a theme relating to the large reduction in foreclosures. But if you dig into the data, you will find that Florida is either number 1 or 2 in every report detailing foreclosure filings.

More than six years after subprime lending and overbuilding led to the worst U.S. real estate slump, the state had the biggest increase in home seizures last year, and the highest foreclosure rate, RealtyTrac Inc. said

Almost 20 percent of outstanding Florida loans were more than 30 days delinquent or in foreclosure at the end of 2012, the largest share of non-current mortgages in the nation, according to data provider Lender Processing Services.

Certainly the severity varies by county and even areas within counties, but Palm Beach County as a whole, shows no similarity to the national trend.

I have been tracking and plotting the foreclosure filing (lis pendens) numbers for the past several years, and below is the 2012 year-end update.

 

Contrary to what you may think when you see the rise in filings (that lots of bank-owned homes are on the market and dragging prices downward), prices have actually been rising here for the past year. But…foreclosures in Florida take an average of 858 days to complete, allowing some homeowners to live for years without making mortgage payments. I believe that the big banks are making a conscious decision to not take back homes. They see prices rising as a result of the inventory shortage and are in no hurry to have an empty, deteriorating property on their books. They’d rather have an occupied property with an owner making no payments. Putting these homes on the market in a slow-drip method is easy, more profitable, and supported by Govt. bailout monies to these TBTF institutions.

Just to illustrate the disconnect between the foreclosure filings and the bank-owned homes on the market, a search of the Palm Beach County MLS this morning reveals only 179 bank-owned properties currently on the market and 321 bank-owned properties currently under contract and waiting to close.

What I DO see happening though is a preference by the lenders to dispose of these non-performing loans prior to a foreclosure sale by way of a short sale. The banks have (finally) seemingly realized that Short Sales are in the best interest of al parties and have even begun giving Short Sale sellers financial incentives for successfully completing a short sale.

Thanks for reading…Steve Jackson

Feel free to call me with comments or questions directly at 561.602.1258