Florida bumped back into the top spot nationally for foreclosure activity in May, but the milestone isn’t based on a surge of new cases. Increases in foreclosure sales -- a signal the state is working through its housing glut -- largely contributed to the first-place ranking.
Palm Beach County foreclosure sale notices were up 38 percent in May compared to the previous year and up 79 percent statewide, according to a report released this morning from the property data analysis firm RealtyTrac.
“If you look at Florida, last year we saw increases in new foreclosures, this year the increases are in scheduled auctions,” said RealtyTrac Vice President Daren Blomquist. “I think this is a good thing because it means you are seeing a progression.”
RealtyTrac measures three benchmarks in the foreclosure process; the initial filing, the notice of a foreclosure sale or auction and the final repossession.
The number of initial foreclosure filings, where homeowners are newly delinquent, was down 17 percent statewide in May compared to last year.
At the same time, the number of underwater homes in Palm Beach County and statewide is also on the decline. A CoreLogic report released Wednesday found 36.6 percent of county homeowners in the first quarter of the year were underwater -- a term that means more is owed on the mortgage than the home is worth.
That’s down from 39.8 percent at the end of 2012, and a hefty decrease from the 44.8 percent of underwater Palm Beach County homes during the third quarter of 2009.
Statewide, 38.1 percent of homeowners were underwater during the beginning of the year, a decrease from 40.4 percent at the end of 2012 and down from 50.8 percent at the end of 2009. The nationwide average of underwater homes was 19.8 percent during the first quarter of the year, down from 21.7 percent.
“The negative equity burden continues to recede across the country thanks largely to rising home prices,” said Anand Nallathambi, president and CEO of the Irvine, Calif.-based CoreLogic. “We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single-family homes should help us close the gap.”
Florida’s inventory of homes for sale may be on the rebound as courts target the state’s immense foreclosure backlog with money from the legislature and the National Mortgage Settlement.
Also, Palm Beach County made a push beginning in mid-April to set aging foreclosure cases for trial. Hundreds of trials have been conducted since the hearings began April 15, with undefended cases typically ending in a swift judgment in favor of the bank.
While Florida won the top state ranking for foreclosure activity in May, South Florida ranked highest among the nation’s large metropolitan areas, RealtyTrac found.
In Palm Beach, Broward and Miami-Dade counties, one in every 209 homes was in some stage of foreclosure last month. The notices of foreclosure sale tripled in the tri-county area in May compared to the same time in 2012.
“I see the increases in foreclosure sales as part of the necessary healing process to deal with the distressed properties,” Blomquist said.
But with so many factors affecting Florida’s real estate recovery, predicting the future is difficult, said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach.
Last week, Gov. Rick Scott signed a controversial bill into law meant to expedite foreclosures, but foreclosure defense attorneys say they will challenge it as unconstitutional. Wall Street corporations and hedge funds are buying single-family homes to rent out _ a phenomenon that McCabe said is falsely inflating prices. And there is still concern that lenders remain too tight-fisted with mortgages, shutting out traditional homebuyers.
“Our market conditions are so unusual,” McCabe said. “Some say the hedge funds saved the real estate market, but I think they are just going to cause another boom and bust cycle.”
The percent of underwater homes in Palm Beach County and statewide is steadily declining, but Florida still ranks second in the nation for homeowners who owe more on their mortgages than their homes are worth.
The top 5:
Nevada, 45.4 percent
Florida, 38.1 percent
Michigan, 32 percent
Arizona, 31.3 percent
Georgia, 30.5 percent
Top five foreclosure states in May