Foreclosure activity jumps back above 200,000 mark06/14/2012
A new foreclosure report provides fresh evidence that the housing market may still have a ways to go before achieving recovery.
According to RealtyTrac's latest Foreclosure Market Report, there were 205,990 foreclosure filings - which includes default notices, scheduled auctions and bank repossessions - in May, a 4 percent drop from the same period last year. More specifically, one in every 639 housing units had a foreclosure filing during May.
At the same time, however, there was a 9 percent increase in foreclosures when compared to April.
Brandon Moore, CEO of RealtyTrac, indicated the dichotomy suggests the housing market will go through many peaks and valleys before it reaches normalcy.
"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 Moore. "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."
He added that more banks have come to the realization that selling foreclosed homes as short sales is preferable to repossessing them, as it helps minimize their losses.
Other findings from the report showed that foreclosure activity may be on the rise again. For example, May marked the first time since February that foreclosure activity was above 200,000 units. Additionally, foreclosure starts increased year-over-year for the first time in more than two years and rose on an annual basis in 17 of the 26 states with judicial foreclosure processes.
However, there was some evidence to suggest that some homeowners found it easier to pay for their mortgages and closing costs, RealtyTrac indicates. Nevada - which is perpetually among the leading states in foreclosure filings - posted a 66 percent drop in foreclosure activity in May year-over-year. Still, the Silver State had the third-highest foreclosure rate overall. Georgia, meanwhile, jumped from the fifth spot to first in foreclosure activity, the first time since 2006 that the Peach State has had the highest rate.
Other states with a high number of foreclosures included Arizona, Florida, California and Ohio.