WHY IT MATTERS
Foreclosures can hurt home values, which are important even to people who aren’t likely to sell or buy anytime soon. Home values contribute to the so-called “wealth effect” that helps drive the broader economy by making people more confident about purchases of all types.
Metro Atlanta foreclosure notices, down 56 percent in January from the same month a year ago, are at their lowest level in a decade.
Not so long ago, at the peak of the housing crisis, foreclosed-on homes made up the bulk of those on the market. But the number of foreclosures has been trending downward since 2011. In the past year, housing prices have risen and the inventory of for-sale homes has fallen — in large part because there are fewer foreclosures on the market.
This year, Atlanta Board of Realtors president Todd Emerson said, property values will continue to rise and sales will be up, as well.
“Don’t wait for the flowers to start to bloom. Go ahead and put your home on the market now,” he said. “I think we are going to see good activity.”
There were 2,454 foreclosure notices filed in January, according to data from Equity Depot in Kennesaw. The last time the figures were this low was June 2003, when 2,393 foreclosure notices were filed.
“Holy mackerel,” said John Hunt, a senior analyst with the real estate analysis firm Smart Numbers. “That’s very good news.”
In the past five years, Hunt said, about 75,000 metro Atlanta homes sold for $50,000 or less. The amount of cheap inventory forced prices down and largely kept people from selling their homes if they weren't forced to do so.
But an improving economy means fewer people owe more on their homes than they are worth. The inventory of for-sale homes is still historically low, Hunt said, and that should continue to push prices up.
It also led to a 38 percent increase in new-home construction in 2013, with about 13,000 closings, Hunt said. A smaller pipeline of possible foreclosures will continue to lead to new construction and will encourage move-up buyers to put their homes on the market.
The large number of foreclosures was absorbed “more quickly than a lot of folks anticipated,” said Daren Blomquist, vice president at RealtyTrac.
“The market’s no longer getting weighed down by foreclosures,” he said. “There’s a more normal, healthy pattern going forward.”
Still, he said, there are still lingering effects of the housing crisis and red flags that may mean the housing market has not truly healed.
In some states, Blomquist said, foreclosures have risen again after initially falling. Blomquist also said he was concerned that banks might be selling off their nonperforming loans, instead of foreclosing on them.
Barry Bramlett, whose Equity Depot compiles the numbers, said he thinks lenders are taking steps to avoid the stigma of foreclosures, but that some problems still persist.
“It’s easier to say that things are improving,” Bramlett said.
But, he said, there’s a good chance that possible foreclosures are “being handled in a different way” that makes the improvement seem better than it truly is.
Banks may be taking some steps that mask foreclosures, but Blomquist said it’s more likely that fewer foreclosure notices are a sign of improvement. And Hunt, with Smart Numbers, said he doesn’t expect another shoe to drop.
“We’re better,” he said. “We’re constricting the pipeline for future foreclosures.”
That will continue to have an impact on the non-foreclosure housing market.
“When you have a three-month supply (of homes for sale) and good buyer demand, you’re going to see multiple offers,” said Emerson, with the Atlanta Board of Realtors. “People aren’t going to have the luxury of waiting a week or two. …Fewer foreclosures means we’re going to see prices appreciate again.”
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