U.S. Foreclosure Activity Drops To More Than 11-Year Low In Q3 2017

Friday, October 13th, 2017

 ATTOM Data Solutions, curator of the nation's largest multi-sourced property database, today released its Q3 2017 U.S. Foreclosure Market Report™, which shows a total of 191,824 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — in the third quarter, down 13 percent from the previous quarter and down 35 percent from a year ago to the lowest level since Q2 2006 — a more than 11-year low.

U.S. foreclosure activity in Q3 2017 was 31 percent below the pre-recession average of 278,912 properties with foreclosure filings per quarter between Q1 2006 and Q3 2007 — the fourth consecutive quarter where U.S. foreclosure activity has tracked below the pre-recession average.

"Legacy foreclosures from the high-risk loans originated between 2004 and 2008 have largely been cleared out of the distressed market pipeline," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "Meanwhile loans originated during the housing boom of the last five years are posting foreclosure rates below historic averages, with the notable exception of FHA loans originated in 2014, which have the highest foreclosure rate of any FHA loan vintage since 2009 — 29 percent above the historic average for FHA loans although still 55 percent below the peak in 2007."

Foreclosure starts down nationwide, up in 24 percent of local markets
Lenders started the foreclosure process on 93,724 U.S. properties in Q3 2017, down 7 percent from the previous quarter and down 16 percent from a year ago to the lowest level since ATTOM began tracking, in Q2 2005.

Counter to the national trend 51 metro areas (24 percent of the 217 analyzed in the report) posted a year-over-year increase in foreclosure starts in Q3 2017, including Dallas-Fort Worth, Texas (6 percent increase); Denver, Colorado (12 percent increase); Cincinnati, Ohio (5 percent increase); Cleveland, Ohio (29 percent increase); and Columbus, Ohio (23 percent increase).

Other major metros with a year-over-year increase in foreclosure starts in Q3 2017 included Austin, Texas (up 29 percent); Nashville, Tennessee (up 17 percent); Milwaukee, Wisconsin (up 97 percent); Oklahoma City, Oklahoma (up 34 percent); and Louisville, Kentucky (up 27 percent).

FHA foreclosure rates on 2014 vintage loans were at an 11-year high in Austin and Denver, a 10-year high in Oklahoma City and Nashville, and a nine-year high in CincinnatiClevelandColumbus and Dallas.

Foreclosure activity below pre-recession levels in 57 percent of local markets
Third quarter foreclosure activity was below pre-recession averages in 123 of the 217 metro areas analyzed in the report (57 percent), including Los AngelesChicagoDallasHouston, and Miami.

"Foreclosure activity in the greater Seattle area continues to trend lower and is now at levels not seen since this report was started," said Matthew Gardner, chief economist with Windermere Real Estate, covering the Seattle market, where third quarter foreclosure activity was 46 percent below its pre-recession average. "The market remains starved for inventory which is pushing up prices well above average rates. As such, almost all housing units that were in negative equity have seen values rebound, which is why foreclosure activity has dropped to such low levels."

Counter to the national trend, Q3 2017 foreclosure activity was above pre-recession averages in 94 of the 217 metros analyzed in the report (43 percent), including New YorkPhiladelphiaWashington, D.C.Baltimore, and Virginia Beach.

Highest foreclosure rates in Atlantic CityTrentonCleveland
Among 217 metropolitan areas with at least 200,000 people analyzed in the report, those with the highest foreclosure rates in Q3 2017 were Atlantic City, New Jersey (one in every 150 housing units with a foreclosure filing); Trenton, New Jersey (one in 234); Cleveland, Ohio (one in 275); Fayetteville, North Carolina (one in 283); and Columbia, South Carolina(one in 284).

Average foreclosure timeline increases to new record high
Lenders completed the foreclosure process (REO) on 55,993 U.S. properties in Q3 2017, down 29 percent from the previous quarter and down 35 percent from a year ago to the lowest level since Q3 2006.