U.S. foreclosure numbers have been falling since 2010, but the crisis is far from over. Experts forecast even more foreclosed homes in the near future to solve the housing market’s fundamental issues.
“There are some cases where foreclosure is really the only solution,” said Daren Blomquist, vice president of RealtyTrac.
RealtyTrac is expecting a 25 percent increase of completed foreclosures in 2012. Experts foresee a total of 1 million foreclosures for the year—up from 800,000 in 2011.
“The bottom line is that mistakes made in the housing market are eventually going to have to be faced,” Blomquist said. “We are going to have to deal with that and accept that some foreclosures are necessary.”
According to Blomquist, the delay of foreclosures in 2011 has “prolonged the pain … The market is going to take longer to absorb the foreclosure inventory.”
Experts say that the slowing of foreclosures in 2011 was merely superficial, as the real picture has been postponed. Some numbers were affected by legislation that took effect October 2011, forcing lenders to file an additional affidavit to prove they indeed owned the loan.
“We are really low on foreclosure inventory even though there are a lot of people being foreclosed on, said Ruth Ahlbrand, co-founder of Re/MAX Central. “The banks aren’t putting the homes on the market.”
Unfortunate homeowners are given a note of default. “Going to court slows everything down,” she said.
According to Blomquist, many of the foreclosures that would have happened in 2011 are being pushed into 2012.
In February, lenders repossessed a total of 63,834 U.S. properties, down 4 percent from January, and 1 percent from last year.
Although February foreclosures have decreased on a national scale, 21 states reported an annual increase in foreclosure activity—the largest increase since November 2010, states RealtyTrac.
The February data reveals that half of the largest metro areas face a “year-over-year” increase in foreclosure activity. The greatest increases were seen in Florida with Tampa topping the list with a 64 percent jump, followed by Miami with 53 percent.
Due to new legislation, Nevada’s foreclosure activity dipped to a 58-month low in February. But Nevada still has the nation’s highest foreclosure rate for the 62nd straight month. For every 278 housing units, there was one foreclosure in February alone. The numbers equate to more than double the national average of foreclosures, states RealtyTrac.
California had the nation’s highest foreclosure rate in February, albeit the state’s foreclosure activity did hit a 51-month low. A total of 48,422 California properties had a foreclosure filing in February—one in every 283 housing units.
Experts hope “2012 is the year that the Band-aid is finally ripped off, … it’s going to be ugly down there but it won’t be catastrophic for the market,” Blomquist said. Foreclosures in 2012 will not be as high as 2010, but it will be worse than 2011.
“Assuming that the lenders will get through the backlog in 2012, we will see the trend going forward,” Blomquist said. “The trend [of decreasing foreclosures] will be more consistently downward in 2013 and 2014.”
As foreclosure settlements between major lenders and state Attorneys General are finalized, by mid-year, experts will be able to determine a sturdy trend.
“The question now is how quickly the banks can start pushing through some of the delayed foreclosures,” said Blomquist.