Nationwide foreclosure filings jumped 36 percent from July to August, data provider RealtyTrac reported today, led by sharp increases in Sunbelt states where inflated home prices rather than economic problems like job losses are thought to be the driving factor.
“The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable-rate loans are beginning to reset now,” James Saccacio, chief executive officer of RealtyTrac, said in a statement accompanying the release of the report.
Foreclosure filings climbed in 45 states from July to August, with Arkansas, Kansas, Massachusetts, Mississippi and New Mexico the only exceptions.
Looking back one year, foreclosure filings were up 115 percent, to 243,947, RealtyTrac reported, with only three states — Illinois, Nebraska and Oklahoma — recording a decline from August 2006 levels.
California and Florida climbed RealtyTrac’s list of states with the highest rate of foreclosures in August, with Nevada keeping its hold on the top position.
Nevada recorded one foreclosure filling for every 165 homes — more than three times the national average — as foreclosure filings increased 21 percent from July to August, to 6,197.
California had the second-highest rate of foreclosures nationwide, one for every 224 households, thanks to a 48 percent increase in monthly foreclosure filings to 57,875.
Florida saw foreclosure filings jump 77 percent, to 33,932, for a rate of one per 243 households, the third highest in the nation.
Another Sunbelt state, Arizona, saw a 50 percent increase in foreclosure filings, giving the state the seventh-highest foreclosure filing rate — one for every 289 households, RealtyTrac reported.
RealtyTrac’s monthly reports track filings that are submitted as properties move through three phases of foreclosure. The filings may be generated as properties go into default, are put up for auction, or become “real estate-owned” properties for sale by lenders.
The company’s reports have come under fire in the past, with some saying RealtyTrac’s numbers overstate foreclosure rates by counting some properties more than once as they move through the foreclosure process. To address the issue, RealtyTrac now provides numbers by unique household four times a year (see Inman News story). But the overall trends suggested by the company’s latest monthly report are consistent with second-quarter foreclosure statistics recently released by the Mortgage Bankers Association.
The MBA said four Sunbelt states — California, Florida, Nevada and Arizona — drove the rate of mortgage loans entering foreclosure nationwide to a new record high. The MBA reported that during the second quarter, loans entered the foreclosure process at a record rate of 0.65 percent, compared with 0.58 percent during the previous quarter and 0.43 percent during the second quarter of 2006.
“Were it not for the increases in foreclosure starts in those four states, we would have seen a nationwide drop in the rate of foreclosure filings,” said MBA Chief Economist Doug Duncan when the statistics were released Sept. 6.
Foreclosure in states like Michigan, Ohio and Indiana are driven primarily by economic issues like unemployment, Duncan said. But during the boom, investors and speculators were particularly active in California, Florida, Nevada and Arizona, the MBA said.
One in three purchase loans 90 days past due or in foreclosure in Nevada during the second quarter was on investment properties or second homes, the MBA estimated, with similar numbers in Florida (one in four) and California (one in five). Nationwide, only 13 percent of past-due or foreclosed loans were on investment properties or second homes.
Although RealtyTrac also placed Michigan, Ohio and Indiana among the top 10 states with the highest rate of foreclosure, the Rustbelt states experienced less severe growth in foreclosure filings from July to August than the Sunbelt states. Foreclosure filings in Ohio were up 33.6 percent from the previous month, to 17,793; 11.3 percent in Michigan, to 15,565; and 11.9 percent in Indiana, to 5,008.
In terms of raw numbers, the Rustbelt states racked up 38,336 foreclosure filings in August, accounting for only 15.7 percent of the 243,947 foreclosure filings tallied by RealtyTrac nationwide. California, Florida, Nevada and Arizona, by comparison, saw 106,819 filings, or 43.8 percent of the total.
The Sunbelt was also home to eight of the 10 cities with the highest foreclosure rates, with six cities in California making the list.
Modesto, Calif., ranked first in the nation with one filing per 79 households, followed by Stockton (second), Merced (third), Vallejo-Fairfield (fifth), Riverside-San Bernardino (sixth) and Sacramento (seventh). Other cities on the top 10 metro list were Detroit (fourth, with one filing for every 87 households), Fort Lauderdale, Fla. (eighth), Las Vegas (ninth) and Cleveland, Ohio (10th).