Foreclosures Decreasing

Foreclosures Slowing Down

The overall rate of Sarasota Foreclosures in Southwest Florida has continued to slow over the last month, but many lenders are still busy filing default notices on area properties.

In Sarasota, Charlotte and Manatee counties, there were 1,128 properties that were the recipient of some type of foreclosure filing in the month of August 2012. This amount is down by 6.5 percent since July and is a decrease of 14.1 percent since this time last year. The latest statistics have recently been released by RealtyTrac, Inc.

Charlotte is one county that bucked the local trend and noticed a dramatic increase in filings. The total filings were up 78 percent since July, but the annual average is up by a mere 0.3 percent.

While there are a number of foreclosures in the area, many homeowners are still underwater and facing high mortgage payments with little home equity. Being underwater is an industry term that means that homeowners owe more on their mortgages than their home is worth. Being underwater is also called negative equity, and it affects nearly 37.5 percent of homeowners. CoreLogic said that 70,885 mortgaged residential properties in Manatee and Sarasota counties had negative equity.

The amount of homes that are in negative equity has improved from 75,870 properties or about 40.4 percent since the first quarter of 2012. Florida has been one of the hardest-hit areas in the recent housing crisis and 43 percent of mortgaged properties around the state are underwater. Nevada has the highest number of underwater properties, and 59 percent of homeowners in the state have negative equity.

On other fronts, lenders have initiated 540 foreclosure actions in the three southwestern Florida counties since last month. The lenders filed for “lis pendens,” which is the first step of the foreclosure process. The number of filings accounted for approximately 48 percent of the total filings in the area, according to RealtyTrac.

In Sarasota County, the foreclosure filings are down from 67 percent in July 2012 and 76.2 percent since the same period in 2011. Manatee County filings are also down and fell by 47 percent from July and by 49 percent since August 2011.

Keith M. Redding, Broker of Key Solutions Real Estate, feels many lenders are attempting to utilize other options instead of filing.

Redding said a large number of banks are now seeing the advantages of short sales instead of foreclosing on properties because the losses are not as severe.  Another indicator of the shifting real estate market is that realtors are welcoming foreclosures and short sales into the market because of the limited supply of available homes.  “A controlled flow of these types of property into the market place will help us to satisfy the increasing demand.”

Properties In Limbo

Because the court process can easily take from two to four years, many foreclosures will not hit the market for some time. In addition, the court systems are backlogged, and this could make the waiting period even longer. Estimates suggest that nearly 35 percent of home inventory will be distressed properties, and this should continue for several years.

Industry analysts do admit that there is a bright spot in the currrent equation, and the length of time that it takes the court system to process foreclosures ensures that a spike in supply will not ruin property prices in Southwest Florida.

Other experts believe that the new data is a single-month aberration. They point to the fact that the past few months have been incredibly busy, and the real estate market generally slows in the fall. Many buyers believe that home prices have hit their low and that the Southwest Florida market is at the start of the next rebound.

Across the country, lenders made 193,508 filings against properties in August. This is up 1 percent from July but down by 15 percent since August 2011. RealtyTrac reported 1 in every 68 U.S. homes had a foreclosure filed against it during August 2012.