Foreclosure Filings Fall To 40-Month Low
Foreclosure activity continues to drop nationwide.
Based on data from foreclosure-tracking firm RealtyTrac, foreclosure filings nationwide fell below 220,000 in April 2011, a 9 percent decrease from March.
A “foreclosure filing” is defined as any foreclosure-related action including Notice of Default, Scheduled Auction, or Bank Repossession.
April marks the seventh straight month in which foreclosure filings have dropped and total filings are down more than one-third year-over-year.
One reason why filings are down is that banks are letting more time pass between delinquency and foreclosure, exploring alternative courses of actions such as short sales and loan modifications. It now takes, on average, 400 days from an initial default notice to bank repossession.
That’s more than double the 151-day average of early-2007.
Another reason may be that job growth is returning to the U.S. and job creation is associated with fewer home loan defaults.
Regardless, in the states in which foreclosures are occurring, bank repossessions are concentrating among just a few.
5 states accounted for half of the country’s April REO:
- California : 19.8 percent
- Arizona : 9.5 percent
- Michigan : 7.5 percent
- Florida : 6.7 percent
- Texas : 5.6 percent
Collectively, these 5 states represent just 32 percent of the nation’s population.
On the other end of the chart, Vermont accounted for a measly 0.007% of April’s foreclosure filings.
If you’re a first-time home buyer considering foreclosed homes , or a seasoned investor adding to your portfolio, the good news is that foreclosures are selling at steep, 20 percent discounts relative to non-distressed homes. Just make you know what you’re buying. Foreclosure purchases carry different risks and follow different procedures than “traditional” sales.
Rely on a seasoned real estate agent to navigate the deal.
How To Buy Bank-Owned Homes In A Period Of Rising Inventory
Foreclosure filings rose close to 20 percent nationwide last month versus February, according to foreclosure-tracking firm RealtyTrac.com, and for the 13th straight month, total filings topped 300,000.
In addition, bank repossessions reached an all-time, quarterly record. Through the first three months of 2010, banks reclaimed more than 257,000 homes.
Nonetheless, 4 states dominated foreclosure activity nationwide.
California, Florida, Arizona and Georgia accounted for more than half of all bank repossessions. It’s a disproportionate distribution of foreclosures. Together, the 4 states represent just 23 percent of the overall U.S. population.
The RealtyTrac report revealed some other interesting statistics, too.
- Foreclosure activity was up in 40 out of 50 states last month
- Bank repossessions rose 9 percent versus the same quarter last year
- For the 13th straight quarter, Nevada topped the state foreclosure rate
Regardless of where you’re buying, foreclosures and REO are making a profound impact on pricing and product. Distressed homes are 35 percent of the overall resale market.
There’s excellent value in foreclosures out there if you know where to look, but keep these points in mind:
- Buying bank-owned homes can take 120 days to close or more. Be flexible.
- Foreclosures aren’t always listed for sale publicly. Some inventory is privately-held.
- Bank-owned homes are often sold “as is”. There may be defects that render the homes mortgage-ineligible.
The REO market can be different from the traditional “existing home” market. Therefore, if you have an interest in buying REO, be sure to talk with an experienced real estate agent first.
