Recent trends in foreclosure filings indicate that the housing crisis is far from over. The annual increase in the third quarter of 2015 marks the second consecutive quarter where U.S. foreclosure activity rose on a year-over-year basis following 19 consecutive quarters of year-over-year decreases.
The just-released third quarter report from RealtyTrac shows that there were a total of 327,258 U.S. properties with foreclosure filings — default notices, scheduled auctions and bank repossessions — in the third quarter of 2015, down 5 percent from the previous quarter — but up 3 percent from the third quarter of 2014.
In some states, long-delayed foreclosures are finally entering their final phases, which explains some of the increases.
“In states such as New Jersey, Massachusetts, and New York, a flood of deferred distress from the last housing crisis is finally spilling over the legislative and legal dams that have held back some foreclosure activity for years,” said Daren Blomquist, vice president at RealtyTrac. “That deferred distress often represents properties with deferred maintenance that will sell at more deeply discounted prices, creating a drag on overall home values.
However, in states such as Texas, Michigan and Washington, the third quarter increases are a sign that the foreclosure market has “settled into a normalized pattern close to or even below pre-crisis levels, and in those states the overall housing market should easily absorb the additional foreclosure activity with little impact on home values.”
Another positive: A total of 133,811 U.S. properties started the foreclosure process in the third quarter, down 12 percent from the previous quarter and down 14 percent from a year ago to the lowest level since the third quarter of 2005.
There were a total of 123,040 U.S. properties repossessed by the lender (REOs) in the third quarter, down less than 1 percent from the previous quarter — but up 66 percent from a year ago, the largest year-over-year increase in bank repossessions since RealtyTrac began tracking quarterly foreclosure activity in the first quarter of 2008.
New Jersey has Top State Foreclosure Fate, Florida Rate Drops to Second
New Jersey foreclosure activity increased 27 percent from a year ago, boosting the state’s foreclosure rate to the nation’s highest foreclosure rate: one in every 171 housing units with a foreclosure filing during the quarter — more than twice the national average of one in every 404 U.S. housing units with a foreclosure filing during the quarter.
Florida foreclosure activity in the third quarter of 2015 decreased 17 percent from a year ago, but the state still posted the nation’s second highest foreclosure rate: one in every 186 housing units with a foreclosure filing. Florida foreclosure starts decreased 28 percent from a year ago, and scheduled foreclosure auctions were down 46 percent year-over-year, but bank repossessions in Florida increased 34 percent from a year ago in the third quarter.
Nevada foreclosure activity in the third quarter of 2015 increased 13 percent from a year ago, with the third highest foreclosure rate in the nation — one in every 194 housing units with a foreclosure filing.
Maryland’s foreclosure rate ranked No. 4 highest among the states despite nearly a 7 percent year-over-year decrease in foreclosure activity in the third quarter, and the Illinois foreclosure rate ranked fifth highest, despite a nearly 5 percent year-over-year decrease in foreclosure activity in the third quarter.
Other states with foreclosure rates ranking among the top 10 highest in the third quarter were South Carolina (one in 311 housing units with a foreclosure filing), New Mexico (one in every 322), Ohio (one in every 334), Georgia (one in every 337) and Indiana (one in every 353).