A new wave of foreclosure filings is starting to hit the local and state real estate markets, a trend that could slow the housing recovery.
Last month the number of foreclosure filings in Washington state jumped 38 percent compared to August 2011, according to the latest data from RealtyTrac, an online database for foreclosure property. Washington also had the biggest jump in new foreclosure filings last month, rising 143 percent compared to August 2011.
The jump in foreclosure filings comes after 16 straight months of year-over-year declines, according to RealtyTrac.
Whatcom County also posted a jump in foreclosure filings. According to the report, this area had 50 foreclosure filings last month, up from 36 in August 2011. A vast majority of last month's filings were "notice of trustee sale" documents, typically the first stage of the foreclosure process.
The backlog of distressed property had been building for some time, with about 80,000 Washington state mortgages now more than 90 days delinquent, said Glenn Crellin, associate director of research at the Runstad Center for Real Estate Studies, based at the University of Washington.
Crellin expects foreclosure filings to remain at elevated levels for the coming months but doesn't expect lenders to act too quickly.
"Banks are probably not staffed up to the point where they can go through this quickly," Crellin said. "This will probably take a while."
As to why this sudden wave of foreclosures is coming now, RealtyTrac officials suspect recent legislation might be a factor.
"The rebounding activity in Washington state is likely the result of lenders catching up with foreclosures delayed by a state law that took effect in July 2011 and allowed homeowners facing foreclosure to request mediation. This rebounding pattern will likely be repeated in the coming months in other states that have passed legislation delaying the foreclosure process," said Daren Blomquist, vice president of RealtyTrac, in a press release accompanying the data.
The jump in foreclosure filings comes at a time when sales have rebounded and median prices have stabilized across much of the state and Whatcom County. During the months of June, July and August, Whatcom County real estate agents sold 757 houses and condominiums, up 16.6 percent compared to the same time last year, according to the Northwest Multiple Listing Service. The median price for residential units reversed a downward trend, posting a 1 percent increase last month compared to August 2011.
Darin Stenvers, managing broker at John L. Scott Real Estate, said at the time that having less distressed property on the market was a factor in stabilizing prices in the summer.
Washington state now has the 11th highest foreclosure rate, with one in 664 housing units receiving a notice last month. Across the U.S., one in 681 housing units received a notice in August. In Whatcom County, one in 1,813 housing units received a notice.