Foreclosure Activity in Massachusetts – All Foreclosure Metrics Rise Again  

 

Welcome back to our continuing monthly examination of foreclosure data for Massachusetts.  As we have seen so far in 2016 all the metrics are up again this month.  We are now up to 27 straight months of increasing petitions on a year over year basis.  March was the first time the increase was only single digits during the run which then increased last month back into the teens and is higher again this month once again.  Auctions and Foreclosure Deeds continue to consistently rise each month on an annual basis as has been the recent pattern.

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).

We will start off like we normally do by looking at the petitions.  As stated above they have now risen for 27 straight months on a year over year basis.  Taking a look at the numbers there were 1,130 petitions filed in May 2016 compared to 878 filed in May of 2015 for a modest increase of 28.70%.  While climbing back to double digits last month after falling to the only single digit increase during the current 27 month run, and now getting back to close to 30% there is some merit to the claims that petitions are moderating to some extent.  While increasing the recent increases are relatively small compared to the 70-100% or more increase that were quite common in 2014-15.  That being said the previous increases were huge and they are still consistently increasing so while there is some leveling off they definitely have not leveled off.  Also However since they have increased for over 2 years now looking back to May of 2014 we see that there were 573 petitions filed, which gives an increase of 97.21% increase over those 2 years, and going back to May of 2013 petitions were at 248 for a 356% jump since that year!  Looking at the year so far there have been 5,614 petitions year to date which is up 26.73% over the 4,430 at this point in 2015.  Through the end of the first quarter this year petitions had risen on a quarterly basis for 9 straight quarters.  The moderation in the increases recently it is possible that might not continue once the last month of the 2nd quarter come out for June.  I will actually guess it WILL continue however the increase is likely to be very small, as will any decrease if it in fact does go down.

Next we will look at auctions.  Auctions are the most volatile stat overall, but so far this year has been consistently increasing with everything else.  In May 2016 there were 875 auctions scheduled compared to 573 in May 2015 giving a 52.71% increase.  Year to date they have substantially increased with the 3,761 already scheduled being up 41.55% over the 2,657 auctions announced at this point in 2015.

Finally we will look at the Foreclosure Deeds.  You should expect the foreclosure deeds to track pretty well with the increases in petitions with a long lag because of the long timeframe to complete foreclosures in Massachusetts.  They have been consistently rising year over year for a long time.  This marks the 7th consecutive month that it has happened, as well as 14 of the previous 15.  Looking at the data for this month we see that there were 458 Deeds recorded in May 2016 compared to 344 in May of 2015 giving an increase of 33.14%.  Year to date there have been 2,402 foreclosure deeds filed in 2016 compared to only 1,624 at this time in 2015, giving a 47.91% increase year to date. 

What Does This Mean For The Market? :

Everything was up again this month with petitions climbing back to an almost 30% increase this month after some of the smallest increases in the now 27 month run of increases.  Auctions and foreclosure deeds were up by pretty sizable amounts once again.  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 only really  starting to really see some of this 27 months 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 continue to get 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.  So far this year we are seeing this prediction of steadily rising completed foreclosures coming to fruition. 

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.  If you read are frequent Market Trend Reports you will already know that there is no shortage of examples of weakening markets throughout eastern MA.

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 The Warren Group:

May 2016 Data:  http://www.thewarrengroup.com/2016/07/rising-foreclosures-in-the-bay-state-mark-the-27th-consecutive-month-of-percentage-increases/  

 

 

 

 

 

 

(Image Credit: Rising Foreclosures via Boss Law)

 

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