Surprisingly, it isn’t California. From Marketwatch today:
The recovery in the U.S. housing market is slowly reaching more parts of the country, but some states are experiencing a healthier recovery than others.
There were 47,000 completed foreclosures nationally in May, down from 52,000 a year ago, which is a drop of 9.4%. But if you look at the month-over-month numbers from just April to May, completed foreclosures were up by 3.8%, according to mortgage-data firm CoreLogic. This is still more than double the amount of foreclosures that typically took place before the housing market crash in 2007: Completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
The five states with the highest foreclosure inventory in May were New Jersey (5.8% of all mortgaged homes), Florida (5.2%), New York (4.3%), Hawaii (3.1%) and Maine (2.8%). The five states with the lowest foreclosure inventory were Alaska (0.3%), Nebraska (0.4%), North Dakota (0.4%), Wyoming (0.4%) and Minnesota (0.5%).
The real estate market is working through the final foreclosures, which also provide an opportunity for investors and first-time buyers who are willing to do some extensive renovations, experts say. And although many of these bank-owned homes are in need of repair and not in the best neighborhoods, they will still help boost inventory in those markets. The five states with the highest number of completed foreclosures in May were Florida (122,000), Michigan (44,000), Texas (39,000), California (34,000) and Georgia (32,000) and accounted for almost half of all completed foreclosures nationally. The lowest were the District of Columbia (71), North Dakota (334), West Virginia (515), Wyoming (710) and Alaska (856).
What does all this mean?
We know that the real estate market in the Bay Area is very strong, and that foreclosures are no longer a significant factor. But in the central valley, especially Fresno, Bakersfield, etc., the local economies are still very weak and foreclosures are still high. So it is a good sign for California (as a whole) to be performing well. We still had the third-highest absolute number of completed foreclosures, but as a percentage of mortgages we are looking pretty good.
I’ve written in the last couple of months about the next likely crisis – interest-only loans that are set to recast to fully-amortized payments between 2013 and 2016. California does have a large number of these, so we may not be out of the woods yet.
However, employment is strong (especially in our area), wages are high, and demand is very strong. I do not see any credible risk factors that could stall out housing price appreciation on the horizon. This is a good thing, and perhaps we are returning to “normal,” whatever that is.
Casey Fleming, Author, The Loan Guide: How to Get the Best Possible Mortgage, available on Amazon.
Mortgage Advisor, C2 Financial Corp.
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