There is some evidence that the housing industry may be on the mend. One of the big signs that we may be in a recovery phase is that the number of foreclosure filings has been dwindling. According to an article on CNBC, the number of foreclosures that were reported in the third quarter of 2012 was 531,576. Those numbers include the households that received a notice of default, bank repossessions, scheduled auctions and actual filing for foreclosure. That’s five percent fewer than the second quarter of this year and it’s an entire 13 percent fewer than the same time period last year. That’s a great sign that there is a rebound occurring in the housing market.
Unfortunately, those numbers may be somewhat deceiving. While foreclosures are down overall, those numbers do not take into account the foreclosures that are about to occur in several states. According to Daren Blomquist, the VP of RealtyTrac, “the other shoe is…being carefully lowered to the floor and…making little noise in the housing market.” But that’s about to change.
When it comes to foreclosures, the states fall into two basic categories – some states require a judge in order to proceed with the foreclosure proceedings and other states do not require a judge. In the states where a judge is not required for finalizing a foreclosure, the process gets pushed through quickly and with little delay. Those states include Michigan, California, and Arizona, among others. The states where a judge is required for a foreclosure include Ohio, Illinois, Florida, and New York. The exact figures for the number of foreclosures in these states are still somewhat sketchy, but it is not looking promising.
In 14 of the 26 of the judicial states, there was a spike in foreclosures this year when combined with last year’s figures. In fact, New Jersey experienced a whopping 130 percent increase in foreclosures this year compared to 2011. In New York, there was a 53 percent increase. Pennsylvania had a 35 percent increase. With the number of foreclosed properties increasing in these states, it’s going to be difficult for home prices to increase.
In some non-judicial states, the numbers are more positive. California, for instance, was one of the hardest hit states in terms of foreclosures. The number of foreclosures in The Golden State is still high, but they are down by about 45 percent when compared to the number from four years ago. Arizona is another state where foreclosures have dropped. The dwindling number of foreclosures in these states is making it difficult for investors to buy properties because the prices on the inventory is beginning to increase. In California alone, the number of homes that are priced on the lower end of the spectrum has plummeted by 40 percent, leaving first-time homebuyers in the state with yet another obstacle to overcome when trying to purchase a home. Combine that with the investors who are buying homes with cash and then turning around to rent those homes out and that brings down the number of homes available significantly as well.
While there is some promising news in the housing market, is it enough to call it a rebound? The next 12 months or so will help determine if tha is true or not.