Indianapolis, Atlanta and Dallas have the highest foreclosure rates among the nation’s 100 largest metropolitan areas, according to an industry report released today.
RealtyTrac‘s 2006 U.S. Metropolitan Foreclosure Market Report found that cities in the Sun Belt and Rust Belt generally had the highest foreclosure rates in the first quarter of 2006, while cities in the Northeast and Gulf Coast documented some of the lowest.
“Indianapolis narrowly edged out Atlanta as the city with the highest foreclosure rate in Q1,” said James J. Saccacio, chief executive officer of RealtyTrac. “Most of the cities with the highest foreclosure rates have above-average unemployment rates and below-average home-price appreciation. Unemployment is a major reason why homeowners stop making mortgage payments, and slow home-price appreciation can make it harder for homeowners in default to refinance or sell to stop foreclosure.”
Saccacio added that other economic factors such as decreasing affordability, rising interest rates and speculative buying can also fuel foreclosures. He cited Jacksonville, Fla., and Las Vegas, both of which documented foreclosure rates in the top 10 despite below-average unemployment and above-average home-price appreciation.
“Because of the high home prices in many areas, more home buyers have stretched themselves financially with creative, and often risky financing that involves adjustable interest rates, interest only and negative amortization loans” Saccacio said. “Home buyers with these types of loans are more susceptible to default and foreclosure when interest rates move higher.”
Indianapolis documented a foreclosure rate of one foreclosure for every 69 households, while Atlanta’s foreclosure rate was one foreclosure for every 70 households. Other top-10 foreclosure rates ranged from one foreclosure for every 99 households in Dallas-Fort Worth to one foreclosure for every 140 households in Canton, Ohio and Las Vegas.
The nation’s largest metropolitan area, New York City, documented a foreclosure rate — one foreclosure for every 434 households — that ranked 59th among the top MSAs. First-quarter foreclosures were even less common in the New England states where Providence, R.I., and Boston both registered foreclosure rates among the nation’s 10 lowest.
Several Gulf Coast cities — New Orleans, Mobile, Ala., Baton Rouge, La., and Jackson, Miss. — also documented foreclosure rates among the nation’s 10 lowest. Many defaulted properties in the Gulf Coast region are not entering foreclosure because of an extended foreclosure moratorium imposed by the U.S. Department of Housing and Urban Development in counties affected by Hurricane Katrina.
The RealtyTrac 2006 U.S. Metropolitan Foreclosure Market Report provides the total number of properties entering some stage of foreclosure in each of the nation’s 100 largest Metropolitan Statistical Areas. RealtyTrac’s report includes properties in all three phases of foreclosure: Pre-foreclosures — Notice of Default (NOD) and Lis Pendens (LIS); Foreclosures — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been re-purchased by a bank).
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