Foreclosure Filings Are Rising In Certain Markets

By: Lance T. Denha, Esq.

While some industry sectors are experiencing a boom, there are others that are showing signs of potential weakness in some markets. The real estate industry is one of them.  Current data has shown that 40% of local markets across the U.S have experienced an uptick in foreclosure filings during 2019.

Some markets are showing signs of weakness, and that could represent a reason for worry for homeowners or an opportunity for buyers and investors. During the first half of 2019, there were just under 300,000 properties with foreclosure filings. These filings include default notices, scheduled auctions and bank repossessions. At the local level, a slightly different picture emerges. In 42% of local markets, foreclosure starts increased from the same time period in 2018. Miami had the largest increase (up 32%) followed by Tampa-St. Petersburg, Fla., Atlanta, Washington, D.C., and Denver.

Overall, however, the number of filings has fallen 18% year-over-year and is down 82% from the peak reached back in 2010, when there were over 1.6 million properties with foreclosure filings. Additionally, just over 177,000 properties across the U.S. began the foreclosure process during the first six months of 2019, down 8% from a year ago.

There also may be a correlation with an increase in bankruptcy filings trending upward in 2019.  Bankruptcy petitions for consumers and businesses are on the rise. There was a 5% increase in total bankruptcy filings from the previous month, according to the American Bankruptcy Institute said this week. There were 64,283 bankruptcy filings, up from 62,241 for the same period last year. There were 452,797 filings in the first seven months of 2019, up from 450,568 during the same period last year. There were roughly 1,000 more consumer bankruptcies at this point this year, compared to the same point last year, the organization added.

So while Foreclosure activity is trending downward, there still remain pockets across the nation where foreclosure activity is seeing some flare-ups. Foreclosure starts is a good indication of markets to watch. At the same time, many buyers remain on the sidelines of the housing market because of record-high home prices.

Foreclosure activity can cause home prices to drop in local areas. If that were to occur in the markets that have seen a rise in foreclosure starts, then buyers in those cities and investors outside of those states that could see an opening to buy a home at a more affordable price.