Foreclosures set record in 2010, could likely increase in 2011by Tim Manni
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).
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.”