RealtyTrac has released its U.S. Foreclosure Market Report for May 2012, which shows foreclosure filings—default notices, scheduled auctions and bank repossessions—were reported on 205,990 U.S. properties in May, an increase of nine percent from April, but still down four percent from May 2011's totals. The report also shows one in every 639 U.S. housing units with a foreclosure filing during the month.
“U.S. foreclosure activity has now decreased on a year-over-basis for 20 straight months including May, but the jump in May foreclosure starts shows that it’s going to be a bumpy ride down to the bottom of this foreclosure cycle,” said Brandon Moore, chief executive officer of RealtyTrac. “Based on the rise in pre-foreclosure sales we’ve seen so far this year, a higher percentage of these new foreclosure starts will likely end up as short sales or auction sales to third parties rather than bank repossessions going forward. While pre-foreclosure sales have less of a negative impact on home values than bank-owned sales, they still represent a discounted sale where a distressed homeowner is losing his or her home."
Findings of the RealtyTrac May 2012 report include:
►Foreclosure activity rose back up above the 200,000 level in May after two consecutive months below 200,000.
►Foreclosure starts nationwide increased on an annual basis after 27 consecutive months of year-over-year declines.
►Judicial states combined posted a 26 percent year-over-year increase in overall foreclosure activity while non-judicial states combined posted a 20 percent year-over-year decrease in foreclosure activity.
►Foreclosure starts increased on a year-over-year basis in 17 of the 26 judicial states and in 16 of the 24 non-judicial states.
►Georgia leapfrogged past Arizona, Florida, California and Nevada to post the nation’s highest state foreclosure rate in May, the first time since February 2006 that Georgia’s foreclosure rate has ranked highest among the states.
Foreclosure starts—default notices or scheduled foreclosure auctions, depending on the state—were filed on 109,051 U.S. properties in May, a 12 percent increase from April and a 16 percent increase from May 2011. Foreclosure starts increased annually in 33 out of the 50 states—17 states with the judicial process and 16 states with the non-judicial process. States with some of the biggest annual increases in foreclosure starts included the judicial foreclosure states of New Jersey (118 percent), Pennsylvania (97 percent), Florida (83 percent), Massachusetts (60 percent), New York (59 percent), South Carolina (43 percent), Ohio (32 percent) and Illinois (28 percent), and the non-judicial foreclosure states of Tennessee (165 percent), Texas (51 percent), Missouri (35 percent), Georgia (30 percent), and Michigan (24 percent).
After three consecutive monthly decreases to a 49-month low in April, bank repossessions (REOs) increased seven percent on a monthly basis in May. Lenders completed the foreclosure process on 54,844 U.S. properties during the month, still down 18 percent from May 2011. REO activity increased on an annual basis in 17 states in May, including North Carolina (66 percent), Illinois (65 percent), Massachusetts (59 percent), Florida (32 percent), Georgia (31 percent), and Ohio (26 percent). States with annual decreases in REO activity included Nevada (68 percent), Arizona (43 percent), Michigan (42 percent), Colorado (42 percent), California (27 percent), Minnesota (24 percent), and Indiana (17 percent).
Georgia's foreclosure activity in May increased 33 percent from the previous month and 30 percent from a year ago, helping the state post the nation’s highest foreclosure rate for the month, as one in every 300 housing units with a foreclosure filing. Georgia’s foreclosure rate leapfrogged the foreclosure rates in Arizona, Florida, California and Nevada, all of which posted higher foreclosure rates than Georgia in the previous month.
After dropping to a 53-month low in April, Arizona's foreclosure activity bounced 24 percent higher in May, helping the state document the nation’s second highest foreclosure rate for the month—one in every 305 housing units with a foreclosure filing. Arizona foreclosure activity for the month was still down 29 percent from May 2011.
Despite a 66 percent drop in foreclosure activity compared to a year ago, Nevada documented the nation’s third highest state foreclosure rate in May—one in every 313 housing units with a foreclosure filing.
California foreclosure activity decreased 19 percent from May 2011, but the state still posted the nation’s fourth highest foreclosure rate for the month—one in every 324 housing units with a foreclosure filing.
Illinois foreclosure activity increased 54 percent from May 2011 and the state documented the nation’s fifth highest foreclosure rate (one in every 325 housing units), while Florida foreclosure activity increased 38 percent from May 2011 and the state documented the nation’s sixth highest foreclosure rate (one in every 340 housing units).
“Disposing of distressed homes by pre-foreclosure sale can also benefit lenders and servicers because pre-foreclosure homes sell at a higher average price point than bank-owned homes,” said Moore. “Our first quarter foreclosure sales report showed that the average price of a pre-foreclosure home was more than $27,000 higher than the average price of a bank-owned home — which quickly adds up given that there have been an average of 1.6 million nationwide foreclosure starts per year for the past five years."
Other states with foreclosure rates ranking among the top 10 were Ohio (one in 495 housing units with a foreclosure filing), Michigan (one in 519), South Carolina (one in 539), and Utah (one in 592).