Foreclosures rising in the US despite strength of current housing market

The number of properties in the United States with a foreclosure filing increased by 4% in the first quarter of 2018 but they are still down 19% from a year ago and 32% below pre-recession rates, the latest data shows. The report from real estate firm ATTOM Data Solutions also shows that numbers increased by 21% month on month in March but February did record an all-time low so such a rise was not unexpected.

An analysis of foreclosure activity by loan origination year shows that 45% of all properties in foreclosure as of the end of the first quarter were tied to loans originated between 2004 and 2008, down from 50% from the fourth quarter of 2017.

‘Less than half of all active foreclosures are now tied to loans originated during the last housing bubble, one of several data milestones in this report showing that the US housing market has mostly cleared out the backlog of bad loans that triggered the housing and financial crisis nearly a decade ago,’ said Daren Blomquist, the firm’s senior vice president.

‘Meanwhile we are beginning to see early signs that some post-recession loan vintages are defaulting at a slightly elevated rate, a sign that some loosening of lending standards has occurred in recent years. Consequently, foreclosure starts are trending higher compared to a year ago in an increasing number of local markets, some of which are a bit surprising given the overall strength of housing in those markets,’ he explained.

A total of 92,703 properties started the foreclosure process in the first three months of 2018, up 8% from the previous quarter but still down 10% from a year ago and it marks the eleventh consecutive quarter with a year on year decrease in foreclosure starts.

However, 37% of metropolitan statistical areas analysed in the report recorded year on year increases in foreclosure starts in the first quarter, up from 20% in the first quarter of 2017 and 43% of those with a population of a million or over saw an increase, led by a rise of 148% in Indiana, a rise of 36% in Louisville, a rise of 30% in Austin and a rise of 32% in Oklahoma City.

Some 22 states recorded first quarter foreclosure activity totals below their pre-recession averages, led by Colorado, Michigan, California, Nevada and Georgia and 28 recorded first quarter foreclosure activity totals above their pre-recession averages, including New Jersey, New York, Pennsylvania, North Carolina and Maryland. First quarter foreclosure activity registered below pre-recession levels in 122 of the 219 metropolitan statistical areas including Los Angeles, Chicago, Dallas-Fort Worth, Houston, and Miami.

First quarter foreclosure activity continued to register above pre-recession levels in 97 of the 219 metro areas including New York-Northern New Jersey, Philadelphia, Washington D.C., Baltimore and Virginia Beach, Virginia. The data also shows that properties foreclosed in the first quarter of 2018 had been in the foreclosure process an average of 791 days, down 23% from an average 1,027 days for properties foreclosed in the fourth quarter of 2017 and down 3% from an average of 814 days for properties foreclosed in the first quarter of 2017.

States with the longest average foreclosure timeline for properties foreclosed in the first three months of 2018 were Nevada at 1,765 days, Hawaii at 1,584 days, Florida at 1,247 days, Indiana at 1,245 days and New Jersey at 1,182 day.

States with the shortest average time to foreclose in the first quarter of 2018 were Virginia at 193 days, Mississippi at 212 days, Wyoming at 252 days, West Virginia at 270 days and Arkansas at 282 days.