A Small Silver Lining in Q1 Foreclosure Storm
While foreclosure activity in the first quarter of 2008 was up on a year-over-year basis in 90 percent of the nation's 100 largest metropolitan areas, according to the RealtyTrac Q1 report issued today, there were a few notable exceptions that could prove to be a harbinger of hope for the nation's battered housing market. On the other hand, those exceptions could just turn out to be a source of false hope, perpetuated in part by short-term foreclosure solutions that are about as effective as a five-gallon bailing bucket on the sinking Titanic.
The notable exceptions included Detroit — a longtime posterchild for the foreclosure meltdown — and Philadelphia, along with a few other Pennsylvania metro areas. Foreclosure activity in Detroit was down nearly 4 percent from the first quarter of 2007, although the city's foreclosure rate still ranked No. 6 among the nation's 100 largest metropolitan areas. Philadelphia's foreclosure rate ranked No. 82, thanks in part to a 30 percent year-over-year decrease in foreclosure activity.
Dispatches from Detroit indicate that free-market forces may be the catalyst. The Detroit Free Press reported that "Detroit home sales shot up 30.8% in March, spurred by investors taking advantage of low prices on foreclosed properties." Detroit home prices have hit a low enough threshold to become appealing to bargain buyers and investors. That in turn allows lenders to start unloading foreclosure inventory, easing a heavy burden that has been weighing down the city's housing market.
Different forces may be at work in Philadelphia, helping that city's foreclosure rate remain relatively low. A moratorium on all foreclosure sales scheduled in April there has now been replaced by a pilot program that delays foreclosure proceedings on owner-occupied properties until the homeowner and lender meet in a "conciliation conference," according to the Philadelphia Business Journal. Foreclosure sales originally scheduled for April and May will be postponed until at least July.
Meanwhile, foreclosure activity continues to increase at a torrid pace in many of the now-familiar foreclosure hot spots: up 291 percent annually in Stockton, Calif., which posted the highest foreclosure rate among the 100 largest metro areas; up 134 percent in Las Vegas, No. 3 on the list; up 294 percent in Phoenix; and up 249 percent in Orlando.
View full Q1 2008 foreclosure report.