Metro Detroit foreclosures hit new low
Foreclosure activity in Metro Detroit hit a new low last year and fell for the fourth consecutive year, according to a report released Thursday, prodding a housing expert to predict home values will continue to rise and foreclosures drop.
The six-county Detroit area had 12,535 default notices, sheriff's auctions and bank repossessions of property in 2014, a 42 percent drop from 21,757 foreclosure filings in 2013, according to Realtytrac, an Irvine, California company that follows housing trends and specializes in foreclosure data.
The 2014 number was a small fraction of the 79,623 filings experienced in the Detroit area at the height of mortgage crisis in 2010 and far below the 35,601 filings made in 2006 when RealtyTrac began tracking the numbers here.
"The foreclosure numbers are continuing to fall in Detroit and have not yet found a floor even with the pre-crisis lows reached in 2014," said Daren Blomquist, vice president of RealtyTrac.
He predicted foreclosures will keep falling in 2015 to what he called a "new normal."
The stabilization in foreclosures should give home buyers, homeowners and homebuilders alike in the area covering Lapeer, Livingston, Macomb, Oakland, St. Clair and Wayne counties more confidence for the rest of this year, Blomquist said.
"Prospective home buyers can be more confident a purchase they make won't be undermined by another wave of distressed sales; homeowners can be more confident their home values will continue to rise without being dragged down by distressed sales," he said. "Even builders should be more confident that if they start building they won't be blindsided by another wave of foreclosures that will compete with their new homes for buyers."
The rise in home values means fewer homeowners will be held hostage to their properties because they are worth less than the mortgage owed.
The rapid decline in foreclosures also has helped reduce the backlog in unsold foreclosed properties, Blomquist said. There are 12,423 Detroit area properties in the foreclosure process or owned by banks — a 31 percent decline from a year ago when there were 18,018 properties and an 82 percent plunge from the peak of 67,752 properties in November 2008, according to RealtyTrac.
The largest proportional drops in foreclosure filings in the past four years have been in Metro Detroit's most prosperous counties, Livingston and Oakland.
The number of default notices, sheriff's auctions and bank repossessions in Livingston fell to 347 in 2014 from 2,561 in 2010, while Oakland's numbers dived to 2,682 filings last year from 20,445 in 2010, according to RealtyTrac.
Wayne County, home to most of the state's foreclosures because it includes Detroit, also has seen relief in the number of distressed properties. Foreclosure activity decreased to 6,259 filings last year, down from 36,704 in 2010.
The four main counties in the Detroit area had lower foreclosure activity in 2014 than they did in 2006, just before the foreclosure crisis began to explode. Macomb's 2,461 filings in 2014 were nearly half of the 4,867 filings in 2006, while Wayne's nearly 6,300 filings were about a quarter of the 24,545 filings in 2006, according to RealtyTrac.
Foreclosures are expected to continue their decline because of tighter federal lending standards set in 2009, Blomquist said.
Metro Detroit real estate agents have said in recent years it is tough to get a mortgage loan on a home valued below $100,000.
But lawmakers might try to change lending standards.
"We're seeing more talk of loosening lending standards for the sake of encouraging more home ownership," Blomquist said.
"Foreclosure rates will likely tick up again if standards are loosened, but policy makers are hoping to find that sweet spot where foreclosures are still within an acceptable range and home ownership is still accessible to most Americans."