Foreclosure filings fell in 2012, yet more foreclosed homes are likely to come up for sale in 2013. This increase could be good news for prospective home owners and investors, according to Daren Blomquist, vice president at Irvine, California-based RealtyTrac, an online marketplace for foreclosure properties.
RealyTrac reported that there were a total of 2,304,941 foreclosure filings default notices, scheduled auctions and bank repossessions on 1,836,634 U.S. properties in 2012, down 3% from 2011 and down 36% from the peak of 2.9 million properties with foreclosure filings in 2010. Blomquist stated that the U.S. is comfortably past the peak of the foreclosure problem nationally, with fourth quarter foreclosure activity at the lowest quarterly level since the third quarter of 2007.
Nevertheless, foreclosure inventory rose in 2012. That is, at the end of 2012 more than 1.5 million homes were in some stage of foreclosure or bank-owned, up 9% percent from the end of 2011, Foreclosure inventory had dropped to a 57-month low of 1.3 million homes in May 2012, but has since risen off that low, RealtyTrac reported.
If foreclosure filings dropped in 2012, did foreclosure inventory rise because of the time lag between filing and a home's eventually going on sale? That is part of it, Blomquist said, as well as the longer time to process a foreclosure. Even though there were fewer properties that entered the foreclosure process during the year, those that are in the foreclosure process are staying longer in the process before they are foreclosed.
Nationally, it took an average of 414 days to complete the foreclosure process in the fourth quarter of 2012, up from 348 days in the fourth quarter of 2011. New York had the longest average time to foreclose, at 1,089 days, followed by New Jersey (987 days) and Florida (853 days). Florida had the biggest share of foreclosure inventory of any state, with 305,766 properties in some stage of foreclosure or bank owned (20% of the national total), followed by California (14%), Illinois (9%), Ohio and New York (both 5%.)
While the influx of foreclosure properties is generally favorable for investors, according to Blomquist, he warned against thinking that there is a rush to buy right now. Make sure to take your time and find the property that really is best for you, he said, whether to live in or to invest. Be persistent because inventory is low in many markets so you may need to submit several offers before you are successful in purchasing a property.