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January 13th, 2011

Foreclosures set record in 2010, could likely increase in 2011

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Foreclosure for Sale Last year was a record-setting year, one of highs and lows. Mortgage rates bottomed out to multi-generational lows, and foreclosures soared to a new record high. RealtyTrac — the leading online marketplace of foreclosure properties — reports today that 3,825,637 foreclosure filings were sent to 2,871,891 properties, an increase of nearly 2 percent from 2009.

It could have been worse

Back in November I speculated that the robo-signing scandal, which caused foreclosure filings to decrease in October, would lead to an increase of foreclosures during the holiday season. What we didn’t know back in November was just how far the robo-signing scandal set back foreclosure filings.

James J.  Saccacio, chief executive officer of RealtyTrac, explains that the foreclosures which I expected to hit the market at the end of last year are now expected to hit the market in early 2011:

“Total properties receiving foreclosure filings would have easily  exceeded 3 million in 2010 had it not been for the fourth quarter drop in  foreclosure activity — triggered primarily by the continuing controversy  surrounding foreclosure documentation and procedures that prompted many major  lenders to temporarily halt some foreclosure proceedings,” said James J.  Saccacio, chief executive officer of RealtyTrac. “Even so, 2010 foreclosure  activity still hit a record high for our report, and many of the foreclosure  proceedings that were stopped in late 2010 — which we estimate may be as high  as a quarter million — will likely be re-started and add to the numbers in  early 2011.”

Foreclosure filings over the last five years

Our friend and nationally-syndicated columnist Peter Miller provides a glimpse of the foreclosure trend over the last five years:

2010 — 3,825,637 foreclosure filings — down 3.45 percent.

2009 — 3,957,643 foreclosure filings — up 21 percent.

2008 — 3,157,806 foreclosure filings — up 81 percent.

2007 — 2,203,295 foreclosure filings — up 75 percent.

2006 — 1,259,118 foreclosure filings — up 42 percent.

2005 — 885,468 foreclosure filings.

Like Saccacio, Miller notes that if it was not for the slowdown in the fourth quarter of 2010 due to “paperwork concerns,” we wouldn’t have seen the 2010 numbers decrease ( see figures above).

Every market is different

While national figures serve to provide an impression of our country’s real estate market as a whole, it’s important to realize that every market is behaving differently. According to RealtyTrac, just over half of all the foreclosure filings issued in 2010 occurred in five states: Arizona, California, Florida, Illinois and Michigan. Furthermore, Nevada registered the highest percentage of housing units which received a foreclosure filing (9.42 percent).

Miller offers this advice in which I couldn’t agree more:

Real estate — as always — is a localized commodity. That means while national trends are significant, buyers and sellers need to watch pricing patterns in local neighborhoods and communities, patterns which may not follow national swings.

Purchasing distressed real estate

Homebuyers in today’s real estate market are bound to encounter distressed real estate — foreclosures, short sales and REO properties. In some parts of the country, distressed real estate can make up a majority of the homes on the market.

For tips and advice on how to buy foreclosures, short sales and REO properties, be sure to read our article, “Interested in buying “distressed” real estate? Here’s what you need to know.”

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3 Responses to “Foreclosures set record in 2010, could likely increase in 2011”

  1. Hal (GT) Says: January 13th, 2011 at 4:41 pm

    I know that here in Florida the glut in the market is horrible and only increasing. Add to it the job market, food prices, and rising fuel costs (this cold weather isn’t helping even here) and 2011 doesn’t look like there is a improvement on the horizon. The question is, is there enough money on the side line to take advantage or it or is debt to burdensome all round?

  2. Tim Manni Says: January 14th, 2011 at 9:39 am

    Hey Hal(GT),

    Thanks for your comment yesterday. It’s a great question. Especially in Florida where the distressed inventory is so great, it’s a wonder just how much money it’s going to take to make a real improvement…Given the lending restrictions and, as you mentioned a slow-moving economy, my guess is that’s is going to a long time — years — to get the hardest-hit markets functioning at a pre-bust level once again.

    Thanks, hope to hear from you soon,
    Tim

  3. Real Estate; It will get worse before it gets better | Give Me A Break! Says: February 28th, 2011 at 8:15 pm

    [...] Foreclosures set record in 2010, could likely increase in 2011 (hsh.com) Bookmark It [...]

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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