Foreclosure activity fell in the first quarter to the lowest level in more than four years, but mainly because the process of removing people from their homes has slowed. The number of homes just beginning the foreclosure process rose in March for a third straight month, a sign that the nation's housing problems are far from over, according to RealtyTrac, which tracks the figures.
“The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated,” said Brandon Moore, chief executive officer of RealtyTrac.
He said a large backlog of bank-owned properties that has accumulated over the past few years will put added pressure on the housing market when banks eventually list them for sale.
“The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen,” he said in a news release.
Foreclosure filings were reported on 572,928 properties during the quarter, down 2 percent from the previous quarter and 16 percent from a year earlier, for the lowest total since the fourth quarter of 2007, RealtyTrac said. A default notice, scheduled auction or bank repossession was reported on one of every 230 U.S. housing units in the quarter.
But new foreclosure filings, which indicate lenders are beginning the process of repossession, rose by 7 percent in March, the third straight monthly increase. Foreclosure starts topped 100,000 for the first time since November 2011, although they were 11 percent lower than a year ago.
The decrease in foreclosure activity was caused primarily by declining activity in the so-called non-judicial states, led by Arkansas, with a 79 percent drop, and Nevada, with a 62 percent drop. Recent legislation or court cases in those states have disrupted the normal foreclosure process, according to RealtyTrac.
Foreclosure activity also slowed in other non-judicial states including Washington (down 55 percent), Arizona (down 41 percent), Texas (down 31 percent) and California (down 21 percent).
The 26 states that typically require a judicial review of a foreclosure saw the pace of filings pick up in the first quarter.
The year-over-year pickup in filings in the first quarter was highest in Indiana (up 45 percent), Connecticut (up 38 percent), Massachusetts (up 26 percent), Florida (up 26 percent), South Carolina (up 26 percent), and Pennsylvania (up 23 percent).
States with the biggest monthly increases in foreclosure starts included Nevada (up 153 percent), Utah (up 103 percent), New Jersey (up 73 percent), Maryland (up 53 percent) and North Carolina (up 47 percent).
Nationwide, the length of time it takes to complete a foreclosure continued to rise -- to an average of 370 days in the first quarter from 348 days in the previous quarter. The process is picking up in some states, though. The average time to foreclose in California was 320 days, down from 352 days in the fourth quarter of last year.
The process in some states, though, is taking considerably longer. Foreclosures are taking the longest, on average, in New York (1,056 days), New Jersey (966 days), Florida (861 days), Illinois (628 days) and Maryland.