RealtyTrac has released their foreclosure report for February 2012. While there are some spots of encouragement, the over all consensus is that foreclosure activity is again trending upward, now that the "robo-signing" scandal has been settled.
Around half of the states use what's known as "non-judicial" foreclosure, in which the lender receives a security deed or deed of trust from a borrower, so there is no requirement to go to court in order to foreclose on a property. These states were mostly unaffected by the robo-signing scandal, and foreclosure filings remained at their "normal" pace. That pace is about 300% above the historical norm in Georgia, which has averaged the number 8 ranking, but is currently number 3 on the nationwide foreclosure list.
But part of the reason that Georgia is now ranked 3rd is because some of the other states like California, Nevada and Florida are "judicial" foreclosure states, and the robo-signing scandal resulted in a cessation of most of the foreclosure filing activity while the scandal was investigated and settled. Now that the issue has been settled, it is likely that California and Florida will see significant increases in foreclosure filings. Indeed, according to RealtyTrac, foreclosure filings are up around 25% in those states that have settled with the government over the robo-signing scandal.
So the foreclosure mess drags on, with those states that top the foreclosure activity list still firmly in the lead. But even so, within those states there are areas that are seeing a significant drop in foreclosure filings, while other areas are seeing some of their highest rates of foreclosure to this point.
When you look at your local market on a city-by-city, or county-by-county basis, you'll generally find that prices are rising in some cities, even as prices are still falling in the next county over. For example, Walton County, Georgia, is currently at the top of the foreclosure activity in Georgia, with 1 in every 130 homes seeing a foreclosure filing, while the former top contender, Paulding County, as seen their foreclosure numbers begin to go down, and prices beginning to rise. It's still a very mixed bag in many states like Georgia, with about half of the cities starting to show price increases, while the other half are still going down in value.
Florida, a judicial foreclosure state, also boasts the state with a significant number of counties that top the foreclosure activity list for FHA loans. Florida and New Jersey dominate the top 25 counties nationwide with the highest number of FHA loans now in default, according to FHA Mortgage Mag. Undoubtedly we are going to see a spike in foreclosures in those states if this trend continues. In fact, the situation with defaults on FHA mortgages is very worrisome, as around 19% of ALL FHA loans are in default to some degree. This could spell real trouble for FHA insured mortgages, which insures and thereby makes possible the funding for the vast majority of the housing market at present. Most people are not aware of how serious this impact could be on the future of housing finance.
So, depending on which media outlet you are listening to, the news on foreclosures will be portrayed as favorable or unfavorable. Reports coming from the housing industy groups such as NAR and NAHB, will tend to focus more on the "good" news, and those who analyze housing activity for investment purposes will tend to focus more on the "bad" news. At present, there is plenty of both to go around. But it does appear that prices won't go much lower in most areas, because the investors and owner occupants with cash have moved into the market in a big way. In many areas where foreclosures have been high, this is putting a "floor" under the market, and even driving prices up in some areas that were the early bearers of higher foreclosure rates.
So high foreclosure rates are likely to continue for years to come, but they are moving around from one place to another, and individual markets will witness the ebb and flow at a very local level as buyers gravitate to the areas with the best opportunities for investment.
Housing is one of those essentials of life that is not going away. Shelter is a fundamental need, and once prices get low enough in a given area, the homes start selling again.
There is not really any such thing as a "good" or "bad" market per se'. It's all in what side of the market you are on. You want to watch your local market for the best buying opportunities. It's all about knowing when it's a good time to buy and when it's not. And that decision is a very local one. Not something you're going to hear on the evening news.
Donna S. Robinson is a 16 year veteran of the real estate industry and a staff writer for Realty Biz News. She is an active real estate investor who also provides coaching and consulting services to individual investors, investment companies, real estate agents and brokers. For detailed information on real estate investing, from a variety of experts, join her email list on her website at www.RealtyBizConsulting.com