Foreclosure Activity in Massachusetts – 2 Years of Increasing Petitions

Terrible Twos - Two Years of Increasing Massachusetts Foreclosure Petitions

Welcome back to our continuing monthly examination of foreclosure data for Massachusetts.  As we saw in last month’s report all of the metrics we track were up starting 2016.  Heading into February’s data petitions have now increased year over year for 24 straight, which is the big story as completed foreclosures will continue to increase for a long time as these keep working through the system.  I did give some of my initial thoughts on what is going on with this data in our Q&A Saturday at the start of the month, which will be expanded upon in this article.

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).

Let’s start off by looking at the petitions.  As stated above they have now risen for 24 straight months on a year over year basis, with all the increases being at least double digits.  Taking a look at the numbers there were 1,264 petitions filed in February 2016 compared to only 868 filed in February of 2015 for another big jump of 45.62%.  Since they have increased for 2 years looking back to February of 2014 we see that there were 439 petitions filed, which gives an increase of 188% increase over those 2 years.  February of 2013 was the last month prior to the current 24 month run of increases and was about the same as the 2015 numbers at 856, with petitions up 47.7% over that year.  The article stated that this was the most petitions seen in February since 2012.  If the trend continues next month we will start to see these big increases across the 3 previous years.  While anything is possible I have no reason to think that the trend will suddenly stop.  However last March was a bit of a spike in petitions being the highest monthly total since 2012 and then taking 6 months for another month to exceed it, so there is a possibility that there may not be an increase next month but the trend could pick up again in April.  Personally do not think that will be the case, but it is a better possibility than most months.

Next we will look at auctions.  Auctions are the most volatile and least useful stat overall, but still do give some useful information.  In February 2016 there were 644 auctions scheduled compared to 592 in February 2015 giving an 8.78% increase.  A fairly modest increase, but it is worth pointing out that last February auctions increased around 250% over the 2014 level so even a small increase is a big gain over where they had been 2 years ago.

Finally we will look at the Foreclosure Deeds.  While the auctions will not necessarily track all that well with the petitions the foreclosure deeds would be expected to track much better.  We would expect a significant lag time though as it can easily take 2 years or more to complete a foreclosure in MA.  So many of these increases we have seen in petitions have not even started working their way through the pipeline yet.  Of course many foreclosures will be completed faster than that and we are seeing increases in deeds more regularly now.  Looking at the data we have seen year over year monthly increases for the 4th month in a row now, and only one time in the last year without an increase.  For this month we see that there were 519 Deeds recorded in February 2016 compared to 311 in February of 2015 giving an increase of 66.88%.  There have been 867 petitions filed in these first 2 months of 2016 compared to only 568 at this time in 2015, giving a 52.64% increase year to date.

What Does This Mean For The Market? :

Everything was up again this month with petitions and foreclosure deeds up by pretty sizable amounts.  As mentioned in several previous reports we do not expect to see any big surge in REOs only because the banks do not want to put a lot of downward pressure on the market by flooding it with their inventory.  However with the pattern of increases in deeds getting bigger and consistent every month REO inventory could start to climb as more of these petitions get though the system.  Since the Massachusetts  foreclosure process can be very lengthy, we are still only starting to see some of this 2 years of increasing petitions working their way though the system.  With that being the case there is little reason to not expect a continued increase in the number of completed foreclosures for at least the next 2+ years. 

Conclusion:

Since petitions continue to climb each month year over year banks will be getting more inventory back in the coming months, and years.  Since the foreclosure process will generally take well over a year here we should expect foreclosure deeds to stay high for at least the next 2 years, if not much longer.  Since sustained increase in foreclosure activity is a leading indicator of a market correction we would recommend being skeptical of predictions of endless growth of real estate markets throughout Massachusetts in the foreseeable future. 

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 bank owned places start to come onto the market prices could dip and the days on market could start to 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.  With several markets throughout the region already seeing slower growth, flat growth or even pricing drops this danger is only getting riskier.

 

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 Buyer Brokers Only, LLC:

February 2016 Data:  http://info.buyersbrokersonly.com/blog/massachusetts-foreclosure-petitions-increase-45.6-in-february-2016

 

 

 

 

 

 

(Image Credit: Terrible Twos via MyCity4Kids)

 

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