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Colorado foreclosure freefall

Highlights:

  • RealtyTrac releases February foreclosure report.
  • Colorado 3rd largest drop for completed foreclosures.
  • Colorado’s “zombie” foreclosures languishing.

There were only 290 foreclosure sales in Colorado in February, a whopping 76.31 percent drop from February 2013, according to a national report released today.

Chad Ochsner

Chad Ochsner

The report by Irvine, Calif.-based RealtyTrac showed only two states, Vermont and South Dakota, showed bigger year over year percentage drops.

Completed foreclosures fell by 82.61 percent in Vermont and 80.17 percent in South Dakota.

For the entire U.S., foreclosures fell an average of 32.71 percent from February 2013.

“The Denver market is certainly normalizing based on the large drop of distressed properties over the past year,” Chad Ochsner, owner/broker of RE/MAX Alliance, told RealtyTrac.

“The worst of the foreclosure crisis is thankfully behind us, however it’s not entirely over as we saw a surge in foreclosure activity early this year, and we predict there may be another month of higher foreclosure activity this summer,” Ochsner continued.

“We are not quite back to pre-recession levels, but Denver remains very healthy and is quickly returning to normal,” he said.

Foreclosure starts in February dropped 26.78 percent from a year earlier, while the U.S saw a 27.48 percent drop.

Foreclosure starts in Colorado, however, dropped 22.93 percent in February from January, compared with a national month-to-month drop of only 9.43 percent.

In Colorado, one out of every 1,721 household units was in some stage of foreclosure, according to RealtyTrac, compared with one out of every 1,170 households nationally.

In the City and County of Denver, however, only one out of every 2,084 was in some stage of foreclosure.

Ratios for other area counties include:

  • Adams, one out of every 1,528;
  • Arapahoe, one out of every 1,832;
  • Boulder, one of every 4,889;
  • Broomfield, one out of every 5,638;
  • Douglas, one out of every 2,696;
  • Elbert, one of out every 2,236;
  • And Jefferson, one out of every 2,256.

Nationally, foreclosures activity was at more than seven-year low in February.

There were a total of 112,498 U.S. properties in some stage of the foreclosure process, a 27 percent drop from February 2013 and a 10 percent decrease from January.

“Cold weather and a short month certainly contributed to a seasonal drop in foreclosure activity in February, but the reality is that new activity is no longer the biggest threat to the housing market when it comes to foreclosures,” said Daren Blomquist, vice president at RealtyTrac. “The biggest threat from foreclosures going forward is properties that have been lingering in the foreclosure process for years, many of them vacant with neither the distressed homeowner or the foreclosing lender taking responsibility for maintenance and upkeep of the home — or at the very least facilitating a sale to a new homeowner more likely to perform needed upkeep and maintenance,” he continued.

Home vacated by homeowners are known as “zombie” properties.

Zombie properties in Colorado spent an average of 1,041 days in the foreclosure process, the sixth highest in the nation. Nationally, the average number of days in the foreclosure process for zombie properties is 1,031.

“One in every five homes in the foreclosure process nationwide have been vacated by the distressed homeowner, but it is closer to one in three foreclosures in some cities,” Blomquist added. “These properties drag down home values in the surrounding neighborhood and contribute to a climate of uncertainty and low inventory in local housing markets.”

In the first quarter there were a total of 152,033 zombie foreclosures in the system in the U.S. They represented 21 percent of all properties in the foreclosure process.

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.