1.5KSHARES1.3K9621151In real estate, the spring is often seen as the ideal time to buy or sell a house. The term “Spring Buyer’s Season” exists for a reason, as renters and those
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Houston home foreclosure starts on the rise, according to alarming new report
The Houston area saw a 76 percent spike in foreclosures in July.Photo courtesy of HAR
Houston, it looks like we might have a foreclosure problem. This summer, the Houston area has posted alarming year-over-year jumps in the number of homes starting to go through foreclosure, according to a new report from ATTOM Data Solutions.
The Houston area saw a 76 percent spike in what’s known as foreclosure starts this July compared with last July, the ATTOM report says. This followed two months of double-digit increases in the Houston area compared with last year: 62 percent in June and 153 percent in May.
A foreclosure start represents the first public notice of a foreclosure proceeding.
“The increase in foreclosure starts was somewhat expected in Houston and some parts of Florida — particularly Jacksonville — given the hurricane-induced flooding there last year,” says Daren Blomquist, senior vice president of ATTOM, a provider of real estate data. “But the widespread upward trend in foreclosure starts across a geographically diverse set of markets this summer indicates there is more to this trend than just natural disasters driving increased distress, although that is an interesting and important piece to all this.”
Blomquist says July’s nationwide uptick (less than 1 percent) in foreclosure starts compared with the same month in 2017 “reflects a gradual loosening of lending over the past few years that is naturally resulting in higher foreclosure numbers across a diverse set of housing markets.”
July marked the first year-over-year increase in foreclosure starts nationwide following 36 consecutive months of year-over-year decreases, ATTOM says.
In total, 96 of the 219 metro areas analyzed in the ATTOM report, or 44 percent, posted year-over-year hikes in foreclosure starts in July. Twenty-one states saw increases, including Texas (7 percent).
Aside from Houston, Austin was the only Texas market listed in the report as having notched three months in a row of significant year-over-year increases in foreclosure starts: 65 percent in May 2018 compared with May 2017, 44 percent in June, and 29 percent in July.
Michael Weaster, a foreclosure specialist with Berkshire Hathaway HomeServices Anderson Properties in Bellaire, says he hasn’t detected a rise in foreclosure activity in the Houston area. In fact, Weaster adds, “I have never seen it this slow in the world of foreclosures.”
Some experts speculated that Hurricane Harvey would cause a bump in “real estate owned” (REO) deals, Weaster says. But Weaster says he hadn’t handled any Harvey-related REOs until this month, when he got two from the same lender. An REO refers to a property taken over by a lender and then sold after it failed to be purchased at a foreclosure auction.
Weaster suspects most of the homes in the Houston area that recently have gone into foreclosure have been sold through government-run foreclosure auctions rather than through real estate agents.
“Most of what I have seen in the past 12 months — with the exception of the two flooded homes I just got — have been your run-of-the-mill foreclosures where they just could not afford to keep the homes,” he says.
Data from the Houston Association of Realtors (HAR) backs up Weaster’s observation. The group tallied 159 local foreclosure sales in the region’s Multiple Listing Service (MLS) in July 2017, compared with 105 in July 2018. That’s a drop of 34 percent.
From January through July this year, 705 local foreclosure sales were reported through MLS, compared with total home sales of 44,148, according to HAR. During that period, foreclosures composed just 1.6 percent of total sales.
HAR spokesman David Mendel says his association “is not seeing a spike in foreclosures at all. That means that many of these transactions are happening outside of MLS.”