New foreclosures rose 11.8 percent in the first six months of the year, according to a report by Foreclosure.com, a company that compiles a database of foreclosed homes and investment property information.
The Foreclosure.com 2006 Mid-year Market Analysis found that foreclosure properties are exchanging hands at about twice the rate of existing home sales as a growing number of loan defaults convert to foreclosures.
About 30 percent of foreclosure inventory is being sold each month, according to Foreclosure.com, while an analysis of data from the National Association of Realtors trade group indicates that about 17.7 percent of existing-home inventory was sold in May 2006. NAR data also shows that the national inventory of existing homes for sale has risen in the first five months of 2006 from 2.88 million homes in January to 3.6 million in May, a 25 percent increase.
New foreclosures rose from 23,982 in January to 26,802 in June. Meanwhile, active foreclosure inventory levels have been on the decline, with available inventory dropping from 95,073 in January to 89,352 in June – a 6 percent drop.
“Everything we are seeing in the current climate in the real estate industry is driven by rising interest rates and a sluggish housing market,” said Brad Geisen, president and CEO of Foreclosure.com, in a statement. “While just a year ago sellers were in the driver’s seat, foreclosure rates over the last six-months suggest buyers now have the upper hand.”
According to the Foreclosure.com report, Georgia ranks highest among states in foreclosure rates to date in 2006, followed in order by Indiana, Colorado, Michigan, Texas, Ohio, Tennessee, South Carolina, North Carolina and Utah.
The Midwest region has registered the highest foreclosure rates in the nation over the last two years, with Michigan frequently leading the pack, according to the announcement, though the Midwest foreclosure rate has leveled in recent months.
“Our mid-year analysis leads us to believe the Midwest is less prone to a worsening foreclosure situation. But there still exists a high number of properties available,” Geisen said in a statement.
Geisen also said he believes that Florida and California, which have seen a lot of price appreciation, are headed for the biggest real estate market correction.
A six-month snapshot of California from January to June revealed that the new foreclosure rate has increased from 71,122 households per foreclosure (ranked 50th nationally) to 18,608 households per foreclosure (ranked 44th nationally).
Also, the state’s active foreclosure rate has risen from 7,828 households per foreclosure (ranked 46th among states) to 4,502 households per foreclosure (ranked 36th).
Arkansas, California, Florida, Nevada, Rhode Island, Tennessee and Vermont have been moving up on the rankings list during the past six months as the number of new foreclosures in those states has increased.
Meanwhile, Illinois, Kansas, Maryland, New Jersey and Washington have been moving down in new foreclosure rankings during the past six months.
Based in Boca Raton, Fla., Foreclosure.com maintains a database of about 1.2 million foreclosure, pre-foreclosure, bankruptcy, FSBO and tax lien listings.