Foreclosure notices in metro Atlanta this year fell to the lowest number in three years, but those in the housing business are uncertain whether the drop is a sign of a coming home value recovery or or just a new symptom of sick market.
Notices through December's filing period totaled 109,548 for the 13-county area in 2011. That was down 14 percent from the peak of 127,140 in 2010, according to Equity Depot, a Kennesaw real-estate analysis firm.
However, there were still well over twice the number of filings in 2006 and more than seven times the number in 2000, and foreclosures continue to pull down values even for homeowners paying their mortgages.
David Oliver, senior vice president of government relations at the Georgia Bankers Association, said he believes the most unreliable loans made during the boom years have been foreclosed.
Loan modification programs created by banks and associated nonprofits are cutting into foreclosures -- there have been 62,000 workouts in Georgia this year compared to about 33,000 foreclosure sales, he said.
At the same time, an unknown number of owners still strain to stay current on their mortgages. The longer the economy limps, the more likely they will run out face foreclosure, putting more homes in the pipeline, he said.
The number that would truly indicate a better housing market is a falling unemployment rate, Oliver said.
"We would be optimistic and hope [economists'] predictions are off to conservative side. It is a season of hope," Oliver said.
Assessing what the drop in foreclosure notices says about the broader market is difficult because the bursting housing bubble created conditions real estate agents, economists and analysts have never dealt with before.
Forelcosures now make up one-third of home sales, and there's no clear count of how many of them remain on the market. More foreclosures are ending short of actual repossession and auction, as banks cut new financing deals with homeowners. Meanwhile the supply of for-sale homes in metro Atlanta that must compete with foreclosures is dropping.
Typically, prices rise as supply falls. But the prevalence of foreclosures has pulled down home values anyway. According to the National Association of Realtors, the median price in the region dropped from $109,900 in October 2010 to $87,800 last October.
"Supply and demand is just not working anymore," Dan Forsman, President and CEO of Prudential Georgia Realty, said last week.
The housing market doldrums are a major impediment to economic recovery, as the region has shed thousands of development related jobs. Other workers are unable to sell a home to chase other opportunities, and homeowners are frozen in economic uncertainty amid falling values, leaving many owing more than their house is worth, a condition known as being "underwater."
It's worse than that for Stephen Smith of Atlanta, who bought his Fulton County home near the height of prices in 2005 and lost his county job in May. He tried twice to work out a loan modification but was unsuccessful, and he still does not have a new job. His home was sold back to the lender on Fulton County's courthouse steps last week.
"Someone came by Saturday and stuck a notice on our door," Smith said.
He has no idea where he, his wife and child will end up if they get evicted, but he remains hopeful.
"There's not going to be any presents under the tree, but I still have hope and faith in God," Smith said.
Metro Atlanta's rate of foreclosures has bounced between third and sixth highest in the country this year, said John O'Callaghan, president and CEO and the nonprofit Atlanta Neighborhood Development Partnership. It buys foreclosed homes and helps families move into and purchase them.
Even with a drop in 2011 notices, the accumulation of bank-owned properties over the last four years and tight credit for potential buyers is skewing the market, he said.
"So, we are not, frankly, in better shape," he said.
Economists at the Mortgage Bankers Association in Washington predict the nation is at or near the bottom of the price slide, and that the economy will continue slowly improving.
Georgia should see "frustratingly slow" improvements until 2013, when things will get better, said Mike Fratantoni, the vice president of research.
FORECLOSURE NOTICES MAILED IN METRO ATLANTA
2000 15,253
2006 44,971
2007 58,076
2008 79,484
2009 117,107
2010 127,140
2011 109,548
Source: Equity Depot
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