NEW YORK (MainStreet) — Foreclosure filings decreased by 15% in the first quarter of 2011, according to the latest data from RealtyTrac, a real estate monitoring firm.
However, Rick Sharga, RealtyTrac’s senior vice president, attributes the seemingly positive numbers to the continuing backlog of paperwork left over from the foreclosure filing freeze that took place in October 2010. h
“The numbers look a lot better than they actually are,” Sharga says. “I wish I could say they indicate recovery in the housing market, but, unfortunately, that’s not the case.”
Based on last year's numbers, Sharga said that RealtyTrac expected that close to 900,000 homeowners would receive a foreclosure filing the first quarter of 2011. Instead, 681,153 U.S. properties entered some stage of foreclosure – default notices, scheduled auctions and bank repossessions – during the past three months, a 27% decrease from the first quarter of 2010.
The backlog is problematic in that it creates a shadow inventory of distressed properties, and local property values are not likely to rebound until these foreclosures are actually sold off.
The one bright spot in the data, ironically, is that foreclosure filings in March increased 7% from February, with foreclosure filings being reported on 239,795 U.S. properties.
“That could signal a return to more accurate levels of foreclosure numbers,” Sharga said. However, he said that RealtyTrac expects that paperwork issues will continue to delay foreclosure filings and skew the numbers through the end of the second quarter.
Nevada posted the nation’s highest foreclosure rate this quarter, despite a 10% decrease in foreclosure activity from the previous quarter. One in every 35 housing units received a foreclosure filing in the state during the first three months of 2011.
Arizona had the second highest foreclosure rate of the quarter with one in every 60 housing units receiving a foreclosure filing. California finished third with one in every 80 housing units entering foreclosure.
Other states with high levels of foreclosure last quarter include Georgia, Michigan, Florida, Colorado and Illinois.