Home foreclosure activity is up in Whatcom County and across the nation, but it has more to do with cleaning up the previous real estate market collapse.
The number of foreclosure filings in the U.S. increased 3 percent in April to an 18-month high, according to RealtyTrac, an online database of housing and property data. One in every 1,049 housing units received some type of foreclosure filing notice last month, according to the report.
In Whatcom County, the foreclosure activity has increased significantly in the first four months of 2015. According to RealtyTrac’s data, Whatcom County has had 226 foreclosure filing notices through April. In the first four months of 2014, the filing total was 85.
The sharp rise is different than the increase seen five or six years ago when the real estate bubble burst. Last month in Whatcom County, nearly half of the foreclosure filing notices were bank repossession notifications, typically the last stage of the foreclosure process. In 2009 and 2010, most of the foreclosure filings were in the early stage of the process. This indicates that banks are now releasing shadow inventory because overall home prices have risen to a point that they can recoup some of the losses, said Peter Roberts of John L. Scott Real Estate’s Bellingham office. Shadow inventory refers to homes that are in the foreclosure process but not concluded.
“This is part of the cleaning-up process,” Roberts said, adding that he expects banks to work through most of this shadow inventory by the end of 2015.
That’s also the thinking of the latest RealtyTrac report. The report noted the number of housing units beginning the foreclosure process is running consistently below prerecession levels.
“Banks are liquidating these distressed properties in a seller’s market with a low supply of inventory for sale, which should help them sell quickly and at a price that is relatively close to full market value,” said Daren Blomquist, vice president of RealtyTrac, in a news release accompanying the data.
The RealtyTrac report indicates that the bank-owned properties were selling in the first quarter at 87 percent of the average estimated market value. In some markets banks are getting full price for these homes, including San Diego and Charlotte, N.C.
Roberts said that government action is also a factor. During the real estate market collapse, legislation was put in place to slow down the process to give people a chance to avoid foreclosure. Some of those distressed properties are now in the final stages of foreclosure.