Highlights:
- Colorado off Top 10 list for foreclosures.
- RealtyTrac reports a big YOY decline, but a jump from January
- RealtyTrac reports a total of 2,614 foreclosure actions in February in Colorado
This 3-bedroom, 3-bathroom foreclosed home is listed at $179.250.
Colorado ranked 16th in the nation in total foreclosure activity in February, according to a report released today by RealtyTrac.
In February 2012, RealtyTrac, a California-based market research firm, ranked Colorado 11th. In January, it ranked 10th.
“It seems like Colorado has been on its top 10 list forever,” said Ryan McMaken, of the Colorado Division of Housing. McMaken expects to release his own February foreclosure report on Monday.
All foreclosure activity in Colorado, from the start of the process until the lender takes back the property as a REO (Real Estate Owned), showed a 28.5 percent drop from February 2012, slightly better than the 25.4 percent drop for the entire country, according to RealtyTrac.
However, total foreclosure activity rose by 25.5 percent from January, compared with a 2.3 percent gain for the entire nation, according to RealtyTrac.
“I don’t know why that would be,” McMaken said. “While there often is an increase in February from January for seasonal reasons, my report shows a decline.”
Ron Woodcock, a broker who has been specializing in selling distressed properties such as short sales, since moving to the Denver area about a half dozen years ago, said the foreclosure process is moving much faster now than it had been in previous years.
“All the banks, from what I have been reading, hearing and being told, have pretty much flushed everything out of their system,” said Woodcock, a broker with Cherry Creek Properties.
He said the increase in foreclosure activity from January, is most likely because “properties that had been totally stagnated, are moving through the system.”
In any case, McMaken indicated that the worst is over for foreclosures in Colorado and the Denver area.
“I don’t see us returning to our previous peaks,” McMaken said.
For one thing, not enough homes are being sold to feed a future foreclosure crisis.
Also, while banks are loosening underwriting standards for home loans, they are still tight compared by historic standards.
“It’s all relative,” McMaken said. “Banks just aren’t making the risky loans they did before the foreclosure crisis.”
One out of every 841 household units in Colorado was experienced foreclosure activity in February, close to the national average of one out of every 849 households, according to RealtyTrac.
RealtyTrac broke foreclosure activity into starts and completion.
As far as foreclosure starts, Colorado showed a 35.9 percent year-over-year drop in February, compared with a 24.9 percent drop for the nation.
However, on a month-to-month basis, Colorado experienced a 47.3 percent jump in foreclosure starts, compared with a 10.4 percent for the U.S.
As for completions, or REOs, Colorado experienced a 20.3 percent decline from February 2012, while the nation’s average fell by 29.4 percent.
REO activity increased by 32.5 percent from January, compared with a 10.7 percent for the nation.
Colorado had a total of 2,614 total foreclosure actions in February, 1,224 of which were REOs, according to RealtyTrac.
Woodcock said he had expected that during the dark days from 2009 to 2011, the “shadow market” of bank-owned foreclosures would eventually swamp the market with distressed properties.
“Boy, I was totally wrong on that,” Woodcock said. “Our market has tightened up so much that it is unbelievable. Last year was one of the craziest markets I have ever seen in 24 or 25 years in the business. I usually carry 10 or 15 listings and now I have about five.”
In fact, he said the market could use some shadow inventory.
“Whether a big wave is going to hit us, I just don’t know,” Woodcock said. “But we certainly could use some more active listings. When I came here in 2006, there were more than 25,000 active listings. Today, there are fewer than 9,000 all along the Front Range.”
The lack of inventory has pushed up home construction activity in the metro Denver area, but in tiny towns such as Fort Lupton in Elbert County, he said.
“When we moved here in 2006, there was absolutely no building going on,” Woodcock said. “Now, there are over 20 homes being constructed on our street. There is a 40 or 50-acre tract near us that is being developed with new homes. This lack of inventory has just poured gas on new home activity. Home construction is on fire.”
Nationwide, RealtyTrac reported foreclosure activity on 154,281 properties, including default notices, scheduled auctions and bank repossessions.
“At a high level the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years,” said Daren Blomquist, vice president at RealtyTrac.
Florida was ranked No. 1 in the nation, showing a year-over-year increase of 20.5 percent. In Florida, one out of every 282 household unit was in foreclosure in February.
“Dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system,” Blomquist said.
“Foreclosure starts have been steadily building in those states over the last several months and likely will end up as bank repossessions or short sales later this year.”
McMaken said that Colorado appears to be better poised than many other states.
“Demographics are working in our favor,” McMaken said.
“In a lot of households, at least one person is still working, so they are able to survive,” he said. “We are seeing job growth and an increase in household formations. We still have strong migration from other states. There is very little building relative to our population growth. Overall, I think we are in good shape relative to a lot of other states.”
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.
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