Foreclosure Activity in Massachusetts – Experts Polish a Turd in April  

Auction Hammer - MA Foreclosures

We are continuing to examine foreclosure data for Massachusetts as we have over the last several months.  Last month we saw all indicators go back to increasing again after a surprising trend seen in the January 2015 and February 2015 data of foreclosure deeds lagging behind the leading indicators of petitions and auctions.  This month we see some other interesting twists but same general trend of increasing activity. 

Recent Massachusetts Foreclosure Activity:

As a recap there are three items that are tracked for foreclosures which are the petitions (which is the first step for a foreclosure), the actual auctions scheduled and finally the foreclosure deeds, which is where the bank takes the property back at the auction (when nobody else is willing to buy it at the auction).

When we first started tracking this data for the end of 2014 we were seeing all 3 indicators increase each month from the same month the previous year.  In January 2015 and February 2015 we saw the foreclosure deeds actually fall year over year despite both petitions and auctions going up, and consistently going up for many months.  In March that changed back to what we had seen previously with all metrics once again increasing.

In April we see a few interesting things.  First is that the auctions are actually down from April 2014, the first time that has happened since we have been looking at this data.  The other thing is that the petitions are up by the smallest year over year change since February of 2014.

Since Deeds are the only metric that does not have something interesting to elaborate on we will examine them first this month and do the reverse of our normal order.  In April 2015 there were 352 deeds recorded compared to just 229 in April of 2014, giving a year over year increase of 53.7%.

Next we look at the auction announcements.  These were actually down for the first time since we have been looking at the data and show a sharp decrease in the recent climbs that have been seen.  The decline was pretty minor with 399 announcements this April compared to 412 in April 2014, a 3.2% decrease.  Though it is worth noting that this is a steep decrease compared to the 47.6% increase last month and the ~250% increases each of the previous 2 months.  With deeds up by over 50% each of the last 2 months maybe part of this is many auctions taking place so fewer rescheduled ones, which are included in this data.

Finally as noted above the petitions increased by the smallest annual percentage since the last time they actually decreased in February of 2014.  They were still up a good amount though with 958 petitions in April 2015 compared to only 740 in April of 2014.  That is a 29.5% year over year increase.  Experts quoted in the article where we get the data were saying that this may show that lenders are clearing up back logs of delinquent mortgages.  Possible, but one major factor to take in to consideration is that petitions have risen every month for over a year.  Therefore there was an increase in petitions in April of 2014.  Going all the way back to then we see that the change then was huge!  In April of 2013 there were 327 filings and as we stated above there were 740 in April of 2014 so that was an increase of 126.3%.  If we look at the increase since then we see an increase of 193% for the 2 years.  So while it is encouraging to not see increases close to 100%, like several recent months, it is also clear that things have not leveled off and are much higher than the levels seen in 2013.  So this appears to be somewhat optimistic and as I conveyed with this month’s edgy title a bit of “polishing a turd”, since the numbers are still pretty bad.

What Does This Mean For The Market? :

First off it continues to appear that my theory that the decrease in deeds the first couple of months of 2015 was an anomaly going against the other indicators.  With the >50% increases the last 2 months they are much more consistent with what is expected and now, despite those early decreases, deeds are up overall for 2015 compared to the first 4 months of 2014.  With petitions still increasing year over year every month it is inevitable that more REOs will hit the market.  Again remember the long lag in time between the initial petition and the eventual recording of the deed.  It is realistic to think that many of these properties from the initial surge of petitions 14 months ago are just getting recorded now.

Conclusion:

Frankly I do not really know what to make of the decrease in auctions.  My gut feeling is that this is just an anomaly and will revert back to tracking with the petitions next month.  An additional theory can be that since there were some pretty huge increases earlier in the year that much of the backlog actually got taken away and this is a short lull before picking back up with the new inventory.  If this continues next month we will dig a little deeper into why that would be the case.  As for the petitions, as mentioned in that section, they are still up year over year and have been for over a year.  While that rate is down, the fact this are still increasing over the 100%+ plus increases seen last year is not all that encouraging.  With this many petitions continuing to be filed it seems likely that there will be an influx of bank owned properties to the market and it will continue for a couple years.

To reiterate the advice in our previous articles, if you are thinking about selling a house this year you should consider getting it to market ASAP before these other properties start coming to the market.  If a large number of these start to come onto the market prices could dip and the days on market for places could increase.  If this happens you may get hit with the tough situation of selling for less than expected while also taking much longer to sell than you had anticipated.

 

Do you need to sell your Massachusetts or New Hampshire house fast?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

 

All data for this article from Banker & Tradesman via The Warren Group:

April 2015 Data:  http://www.bankerandtradesman.com/news164169.html

April 2014 Data:  http://www.bankerandtradesman.com/news159786.html

 

 

(Image Credit: Auction Hammer via cliparts.com)

 

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