Foreclosure Reading Shows Some Good News, But Brace for 2011
In the three years since the great American housing collapse became a big story, there is good news to report. The numbers are down. But maybe not for long.
The latest home foreclosure data from RealtyTrac show that last month was an improvement over November 2009. In total there were some 262,000 homes in some state of foreclosure this year compared with 306,000 in 2009. And in Patchwork Nation, most of our 12 county types showed some improvement including the heavily populated key types – the largely suburban Monied Burbs, big city Industrial Metros, and the formerly growing Boom Towns.
Now, the caveat. That good news largely comes form the fact that some big banks slowed down on initiating foreclosures after some were accused of signing foreclosure documents without proper verification (a practice known as “robo-signing”).
The result, says Rich Sharga, senior vice president of RealtyTrac, is November and December will likely look better than a year ago, but January, he adds, “will probably be brutal.”
And when you dig into the November foreclosure numbers using Patchwork Nation’s 12 community types, there is reason for concern.
What is ‘Good News?’
Even with lenders holding back on initiating foreclosures, the numbers were up in many places. Five of the 12 Patchwork Nation county types saw an increase in foreclosures since November 2009 – Minority Central, Evangelical Epicenters, Tractor Country, Service Worker Centers and Mormon Outposts.
And even in the places with “good news,” there is reason for concern. The Boom Town counties, which grew rapidly before the housing crisis, did not see a big improvement in the November numbers. They were almost flat in foreclosures last month compared to 2009 – 73,191 versus 73,446 in 2009.
That’s a troubling sign since many of the places where those big banks slowed down on foreclosures fall into Patchwork Nation’s Boom Town category.
So while the November numbers look good in Boom Towns like Riverside County, Calif. (a 26 percent drop in foreclosures compared to last year), Seminole County, Fla. (a 59 percent plunge), and Arapahoe County, Colo. (a 19 percent dip). The bigger question is: What does 2011 hold for those places?
But the biggest question in all these November numbers hangs around the counties Patchwork Nation calls the Monied Burbs.
In October, Patchwork Nation and the PBS NewsHour reportedthat these counties were starting to show signs of strain in the foreclosure reports and rising numbers of homes in inner-ring suburbs began taking hits.
This latest set of numbers reverses that trend – sharply. Foreclosures fell in the Monied Burbs to about 62,000 last month compared to about 78,000 in November 2009. But is that drop real, or simply a part of the big banks’ foreclosure-writing slowdown?
The Burbs are like the groundhogs of the U.S. economy – what they do offers an indication of where the economy is headed. As we have noted in this blog and in the book, “Our Patchwork Nation,” those wealthy counties are key to turning around the consumer economy. In fact, a turnaround is all but impossible without a big boost from the 69 million people living in those 286 counties.
If the drop the November foreclosure numbers show in the Burbs is real, there may be some hope that the economy is on its way up. But if January brings hard news for them real economic improvement is probably still a ways off.
Consumer spending makes up about two-thirds of the U.S. economy.
Three Years In
Most troubling though is three-years after the recession began and the housing market became a big cause for concern, the problem is still very much a part of the economic troubles in the United States.
Rick Sharga says 2011 will likely be the high-water mark for the foreclosure crisis with no serious recovery for the housing market until 2014. For some communities, three more years seems like a lifetime.
And as Patchwork Nation has noted repeatedly, an end to foreclosures doesn’t mean an end to troubles. There are some communities where it will take years for housing values to recover and there will be others – places that are isolated or where the main industry has dried up – where they probably never will, or at least not for decades.
In some of those places that means “the recession” will go on long after it is officially declared to be over. We will be on the road again in 2011 talking to our communities and getting a close-up look at the longer-term effects of the housing crisis.