Housing woes : Foreclosures this year already exceed totals from 2007
Posted on Sunday, June 15, 2008
Washington County Circuit Clerk Bette Stamps has sold more properties at judicial foreclosures sales so far this year than during all of 2007- 74 this year and 65 last year.
She's noticed a slow down this month with only five sales scheduled as of Friday, but that's no sure sign foreclosures are tapering off.
Nonjudicial foreclosure sales, which are typically by mortgage companies, show no signs of slowing with 165 properties posted in Washington County and 203 in Benton County.
"It's too soon to call a peak," Kathy Deck, director of the Center for Business and Economic Research at the Sam Walton College of Business at the University of Arkansas, said.
Deck said Northwest Arkansas faces the same economic conditions that have affected the nation's economy - slowing job growth and an overbuilt housing market that expanded too quickly.
The number of judicial foreclosure sales in Washington County has risen steadily from 35 in 2005 to 65 in 2007. Benton County has had significantly more judicial foreclosure sales than Washington County during the past three years. Benton County held 218 foreclosure sales in 2005 and has sold 198 properties through June 11.
Deck, who prepares Arvest Bank's Skyline Report, said she's not surprised Benton County's foreclosures have been higher because that's where the majority of the region's growth has been during the recent housing boom.
About two-thirds of the new residential lots that came into the Northwest Arkansas market were in Benton County, compared to one-third in Washington County, she said.
The reason foreclosures are so high at this time is because too many people bought into the market at the wrong time and assumed values would keep going up, which would allow them to refinance or sell, Deck said. Another factor is that inflation has outpaced income growth, she said The biggest factor is that people got in over their heads on their mortgages, Deck said. Borrowers fell into the "culture of buying as much house as they could afford," she said.
The growing number of foreclosures in Northwest Arkansas follows a national trend. RealtyTrac, an Irvine, California-based company that tracks foreclosures nationwide, reported last month that foreclosure filings - default notices, auction sale notices and bank repossessions - in April were up 65 percent compared to April 2007. The RealtyTrac totals include tracking of nonjudicial or statutory foreclosures, which are not readily available through public records. The company's data also shows foreclosures across the country may be at an alltime high.
"The total number of U. S. properties with foreclosure activity in April was the highest monthly total we've seen since we began issuing the report in January 2005," James J. Saccacio, chief executive officer of RealtyTrac, said.
The growing number of foreclosures has impacted lenders, borrowers and the already-soft housing market in Northwest Arkansas. Lenders lose money when they foreclose on properties, borrowers ruin their credit scores and suffer emotional and financial hardships and increased foreclosures push real estate prices downward.
Impact on lenders Banks and mortgage companies almost always lose money and incur attorneys
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