Foreclosures fall as housing market changes

Change from Oct. 2010: down 81 percent

Jan.-Oct. 2014: 23,260

Change from 2013: down 48 percent

Change from 2010: down 78 percent

Foreclosure notices in metro Atlanta fell this month to their lowest level of any October since 2001, a crucial signal that stress in the housing market at last has ebbed – although it leaves behind a changed landscape.

The 13-county region saw 2,066 foreclosure notices this month, compared to an average of more than 10,000 monthly notices at the height of the housing crisis, according to a report released Monday by Kennesaw-based Equity Depot.

Improvement comes from two directions: A stronger labor market means fewer people losing their paychecks, and higher home prices has meant less temptation to let the bank take a home.

But more than seven years after housing prices peaked and crashed, tens of thousands of metro Atlanta homes are now owned by huge institutional investors, home values in some areas are still depressed and many lenders remain stingy about providing credit to potential buyers.

The shift into rentals has also meant construction of apartment buildings. Average rents for metro Atlanta are up 3.8 percent in the past year, according to Zillow, a real estate research firm.

“No doubt that the housing market is still soft relative to where we were,” said Roger Tutterow, director of the Kennesaw State University Econometrics Center. “We are nowhere near back to what we would consider normal.”

Foreclosure notices do not always mean the loss of a home. Sometimes, the owner pays what is owed and keeps the home from being sold at auction the next month. But whether the homeowner does end up losing the house or not, the number of notices is seen as a general barometer of stress in housing, as well as in the economy: a signal that owners are having trouble making their monthly mortgage payments.

But at the worst of the crisis, lenders were foreclosing on homes at a faster clip than new homes had been built at the height of the housing bubble.

Between 2006 and March 2014, roughly 235,000 homeowners — roughly 12 percent of all metro households — lost homes to foreclosure, according to John Hunt, president of ViaSearch, an Atlanta-based market research company.

But the wave has passed, he said. “The numbers are back to pre-recession levels. We are not putting many new foreclosures on the market.”

When there are foreclosures, appraisers typically use the sales to gauge — and often reduce — the value of surrounding homes. In 2011, about 20,000 homes in metro Atlanta sold for less than $50,000, Hunt said.

But the undertow is abating: Foreclosure notices this month were down 47 percent from October of last year and were 77 lower than October of 2011.

Bankers now feel less pressured to sell quickly when they take a foreclosed home, said real estate agent Collette McDonald of RE/MAX Around Atlanta. “Foreclosure prices are not the deals that they were a few years ago. You still have investors and clients calling to look at foreclosures, but you have to say, ‘You are too late.’ ”

And that means less of a drag on other prices, she said. “Foreclosures are not much of an issue any longer.”

However, the recovery is uneven, she said. Some places continue to wade through foreclosures, especially Sugarloaf, Powder Springs, Mableton, Smyrna and areas south of Atlanta.

A return to normal-looking numbers does not mean a return to yesteryear’s normal, said Alex Carrick, chief economist at Norcross-based CMD, a research and analysis company focused on commercial construction.

Both lenders and homeowners have been changed by the wave of foreclosures, he said. “Anyone who has gone through it, it’s obviously going to affect their confidence and the decisions they make for some time to come.”

The wrenching changes of the past few years have dampened the willingness – and ability – of many people to spend, he said. “You’ve got to have the confidence to spend. And this could affect a whole generation.”