Less than a month after President Barack Obama announced plans to revamp the federal mortgage assistance program, foreclosure rates in some of the country's hardest hit locales are finally showing signs of a slowdown, according to first-quarter numbers released by RealtyTrac.
Predictably, cities in California, Florida, Nevada and Arizona topped the list of metropolitan areas with the highest foreclosure rates, and California dominated with 10 of the 20 cities suffering the most foreclosure activity. But in 14 of those top 20 metro areas, foreclosure activity dropped on a year-over-year basis.
"The decreasing foreclosure activity in some of the nation's top foreclosure hot spots in the first quarter is largely the result of government intervention and other non-market influences, and not a sure signal that those areas are out of the woods yet when it comes to foreclosures," said James Saccacio, chief executive of RealtyTrac, in a statement.
But although most of the worst-suffering metro areas saw declines in foreclosure rates, the large majority of U.S. cities saw increases. Foreclosure activity rose in 77% of the markets tracked by RealtyTrac (159 of 206 metro areas), and nationwide, first-quarter foreclosure activity climbed 16% from the same period last year. Some cities experienced far more dramatic increases, including Columbia, S.C., where first-quarter foreclosure activity was up 171% from last year. And in Chicago, more homeowners reportedly lost their homes to foreclosures during the first quarter than in any other three-month period over the past five years. Less than three weeks ago, another report from RealtyTrac found that first-quarter bank repossession rates jumped 35% from 2009.
One possible reason for the localized declines in foreclosure activity, according to Saccacio, is a federal government program announced in March and launched on April 5 which is meant to encourage short sales and stem foreclosures. The program, which essentially pays homeowners to sell their underwater homes, may have caused lenders to delay foreclosures in areas where a short sale might cost them less, Saccacio suggested.
Meanwhile, there has been a rush of real estate activity ahead of the April 30 expiration of the federal home buyers' tax credits, but the increase in home sales has not driven prices up -- in fact, they are still slipping. Some analysts' projections suggest the housing market may not bottom out until 2011, while other economists think project that it may be a year or two before the residential real estate market regains some semblance of normalcy.
Foreclosure Rates Rise in Most Cities