Even as foreclosure activity slows across the nation, bank repossessions continue to grow, reaching a new record high in May that's 44% above the rate a year earlier, according to RealtyTrac.
But despite the huge year-over-year growth in repossessions, overall foreclosure activity actually fell 3% from the previous month as 322,920 households received a foreclosure filing, an increase of less than 1% from May 2009.
"The numbers in May continued and confirmed the trends we noticed in April: overall foreclosure activity leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months,” said James Saccacio, chief executive of RealtyTrac. "Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed."
Indeed, RealtyTrac even points out that the number of homes taken back by banks in May increased year-over-year in all 50 states, even as the number of homes scheduled for foreclosure auction fell 4% from the previous month to 132,681, and the number of households that received a default notice fell 7% to 96,462 -- the lowest number since November 2008 and down 32% from the peak of 142,064 default notices in April 2009.
The states with the highest rates of foreclosure activity continued to be Nevada, Arizona and Florida, with Nevada in the lead despite a nearly 12% decrease in foreclosure activity from the previous month and a 16% decrease from the year earlier. In May, one in every 79 housing units in Nevada received a foreclosure filing, putting its rate at five times the national average.
In Arizona, the state with the second-highest rate of foreclosures, one in every 169 properties received a foreclosure filing, an increase of less than 1% from the previous month but a decrease of nearly 5 percent from May 2009.
Florida was hit with the third-highest rate of foreclosures, with one in every 174 properties receiving a foreclosure notice, an increase of nearly 5% from April and a decrease of 14% from May 2009.
The fourth-worst rate went to California, where one in every 186 properties received a foreclosure notice in May, up 3% from April and down 22% from the year earlier. Meanwhile, Michigan's 46% increase in foreclosure filings from May 2009, as well as its 6% increase from April, pushed it into the fifth spot.
But California, with 72,030 households receiving a foreclosures filing in May, still was the state with the most activity. Of the 10 states whose foreclosure activity made up 70% of the national total, California had 22%.
With the second-highest number of foreclosure filings, Florida's 50,685 made up nearly 16% of the national total in May, while Michigan made up 6% of the total with 20,322 properties. Arizona and Illinois each accounted for nearly 5%, with 16,097 properties in Arizona and 15,061 in Illinois.
The remaining states in the top 10 were Nevada with 14,346 foreclosure filings, Georgia with 13,778, Texas with 11,137, Ohio with 10,379 and New Jersey with 7,993.
Not to end on a negative note, but lastly, these states posted significant increases in year-over-year foreclosure activity: 65% in Maryland, 37% in Illinois and 31% in Georgia.
Is it really the beginning of the end of foreclosures? Egad, it's going to be a long, painful haul.
Foreclosures of homes worth more than $1 million began increasing at the end of 2009, according to data provided to CNBC.com by foreclosure tracking website RealtyTrac.
Foreclosures reached a high in February 2010, the last month data were available, when 4,169 high-end homes were somewhere in the foreclosure process; having received a foreclosure notice, had an auction scheduled or had ownership taken over by the lender. That's a 121% increase from a year ago.
Foreclosures reached a high in February 2010, the last month data were available, when 4,169 high-end homes were somewhere in the foreclosure process; having received a foreclosure notice, had an auction scheduled or had ownership taken over by the lender. That's a 121% increase from a year ago.
The deterioration comes just as housing experts say that foreclosures in the low and middle ends of the housing market are showing signs of stabilization.
Owners of expensive homes "were able to stave off foreclosure longer," says independent real estate analyst Jack McCabe, CEO of McCabe Research and Consulting in South Florida. "Lower-end homeowners were the first ones to see the escalating foreclosures, because they generally do not have the cash reserves or credit available that the luxury homeowners do. They had the ability to take their credit cards and pull out thousands of dollars, while the lower-end buyers were already tapped out."
McCabe expects foreclosures in the high-end market will increase into 2011.
Though the RealtyTrac data on high-end homes are not available on a regional or metropolitan basis, anecdotal evidence indicates the problem is cropping up across the country. High-end and luxury categories vary widely from market to market. In some suburban areas, in the Northeast and California, for instance, million-dollar homes are fairly common, but nationwide, they represent 1.1% of overall housing stock.
"We have seen an increase, in the million-plus range, of the number of foreclosures and short sales in the greater Chicago area," says Jim Kinney, vice president of luxury home sales at Baird & Warner.
He says that of the 295 million-dollar, single-family properties sold in the first quarter this year, 37 were either a foreclosure or short sale, when a bank and homeowner agree to sell the home for less than the loan is worth. During the same period a year ago, 10 of 231 fell into those categories.
In the Fort Myers, Fla., area, Mike McMurray of McMurray and Nette and the VIP Realty Group says he has seen a few foreclosed high-end homes on the market compared with none last year. He's currently showing a 4,800-square-foot, $3.65 million home on Captiva Island, where foreclosures are usually rare. The bank-owned home has five bedrooms and access to 150 feet of Gulf Coast beachfront.
"There are more we see coming down the pipeline," McMurray says.
Data show that may be the case around the country. The 90-day delinquency rate on home loans worth more than a million dollars hit a high in February at 13.3%, above the overall rate of 8.6%, according to real estate data firm First American CoreLogic. Foreclosure proceedings generally start after a homeowner has been at least 90 days late on a mortgage payment, experts say.
One difference in the high-end market is that lenders are willing to do more to head off foreclosure by renegotiating the loan or accepting a short-sale transaction, which is essentially a last-ditch effort.
"Lenders are far more likely to go the short-sale route," says Andrew LePage, an analyst at real estate research firm DataQuick. "There's a lot more money at stake, and maintenance can be high if a foreclosure just sits there."
A $1.15 million condominium in Chicago in the landmark Palmolive Building was initially offered as a short sale, but after a buyer did not materialize, it's now owned by the bank, says Janice Corley, founder of Sudler Sotheby's International Realty, which is currently listing it. The condo has lake views and a long list of luxury-building amenities, including a steam room, doorman and gym.
The rise in luxury foreclosures has one Las Vegas real estate agent flying prospective buyers into the city via private jet. Luxury Homes of Las Vegas and JetSuite Air teamed to offer the complimentary trip for buyers flying from Los Angeles to view three foreclosed homes priced between $4.9 million and $6.1 million.
Agent Ken Lowman says he gave three tours over a one-week period and hopes to expand the offer to buyers from other West Coast cities.
There's just too much competition, Lowman says. "It takes an innovative approach like this to get results."
Where are mortgage interest rates heading? Is now the time to buy? MoneyWatch experts answer these questions and more.
Heated pools, ocean views and media rooms are not what most people would expect to find in a foreclosed property, but more high-end homes—priced over a million dollars—have been falling into the hands of banks this year.
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This foreclosed home in Fort Mill, S.C. is currently listed at $1.148 million. |
Foreclosures of homes worth over $1 million began increasing at the end of 2009, according to exclusive data provided by foreclosure tracking website RealtyTrac. Foreclosures reached a high in February 2010, the last month data is available, when 4,169 homes were somewhere in the foreclosure process; either having received a foreclosure notice, had an auction scheduled or the lender took ownership of the property. That’s a 121 percent increase from a year ago.
The deterioration comes just as housing experts say that foreclosures in the low- and mid- ends of the housing market are showing signs of stabilization.
“They were able to stave off foreclosure longer,” says independent real estate analyst Jack McCabe, CEO of McCabe Research and Consulting in South Florida. “Lower-end homeowners were the first ones to see the escalating foreclosures because they generally do not have the cash reserves or credit available that the luxury homeowners do. They had the ability to take their credit cards and pull out thousands of dollars while the lower end buyers were already tapped out.”
McCabe expects to see foreclosures in the high-end market to increase into 2011.
Though the RealtyTrac data is not available on a regional or metropolitan basis, anecdotal evidence indicates the problem is cropping up across the country. Of course, the high-end and luxury categories vary widely from market to market. In some suburban areas of the Northeast and California, for instance, million-dollar homes are fairly common, but nationwide, they represent only 1.1 percent of the overall housing stock.
“We have seen an increase, in the million-plus range, of the number of foreclosures and short sales in the greater Chicago area,” says Jim Kinney, vice president of luxury home sales at Baird and Warner.
He says that of the 295 million-dollar, single-family properties sold in the January-April period this year, 37 were either a foreclosure or short sale (when a bank and homeowner agree to sell the home for less than the loan is worth). During the same period a year ago only 10 of 231 fell into those categories.
In the Fort Myers, Fla. area, a second-home market for the wealthy, Mike McMurray of McMurray and Nette and the VIP Realty Group, says he has seen a few foreclosed homes on the market compared to none last year. He's currently showing a 4,800 square-foot, $3. 65 million home on Captiva Island, where foreclosures are usually very rare. The bank-owned home has five-bedrooms and access to 150-feet of Gulf coast beachfront.
"There are more we see coming down the pipeline," McMurray says.
Data shows that that may be the case around the county. The 90-day delinquency rate on home loans worth over a million dollars hit a high in February at 13.3 percent, higher than the overall rate of 8.6 percent, according to real estate data firm First American CoreLogic. Foreclosure proceedings generally begin to start after a homeowner has been at least 90 days late on a mortgage payment, experts say.
One difference in the high-end market is that lenders are willing to do more to head off a foreclosure by either renegotiating the loan or accepting a short-sale transaction, which is essentially a last-ditch effort.
 |
This five-bedroom, beachfront home in Captiva, Fla. is now bank owned and on the market for $3.65 million. |
“Lenders are far more likely to go the short sale route," says Andrew LePage, an analyst at real estate research firm DataQuick. "There’s a lot more money at stake, and maintenance can be high if a foreclosure just sits there.”
A $1.15 -million condominium in Chicago in the landmark Palmolive Building started was initially offered as a short sale but , after a buyer did not materialize, is now owned by the bank , says Janice Corley, founder of Sudler Sotheby's International Realty who’s currently listing it. The condo has lake views and a long list of luxury-building amenities including a steam room, doorman and gym.
The rise in foreclosures has one Las Vegas real estate agent flying prospective buyers into the city via private jet for free. Luxury Homes of Las Vegas and JetSuite Air teamed up to offer the complimentary trip for buyers flying from Los Angeles to view three foreclosed homes priced between $4.9 and $6.1 million.
Agent Ken Lowman said he gave three tours over a one-week period and hopes to expand the offer to buyers from other West Coast cities.
There's just too much competition, says Lowman. “It takes an innovative approach like this to get results."
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