Foreclosures Fell But The Real Estate Market Still Stinks

The real estate market is showing signs of life after being pushed into the abyss by the Great Recession.  A resurgence, though, is not around the corner.

Foreclosure activity fell 27% in the first quarter of 2011 versus the same period a year earlier, according to RealtyTrac.  The decline from the previous quarter was 15%.   Still, there were default notices, scheduled auctions and bank repossessions on 681,153 U.S. properties in the quarter, equaling 1 in every 191 U.S. housing units. In March, there were foreclosure filings on 239,795  properties, a 7 percent increase from the previous month and a 35 percent drop from March 2010, when 367,056 homeowners received a foreclosure notice – the highest monthly total in the history of the  RealtyTrac monthly report since it began in January of 2005.

Though foreclosures hit a three-year low,  there is not much cause to celebrate.  The Case-Shiller home-price index, which tracks prices from 20 major cities,  and the National Association of Realtors both show that the market is still falling.   Case-Shiller showed that home prices fell 1% in January, their sixth straight decline.  The NAR found that the national median home price in February was $156,000, its lowest level in 9 years and 5.2% decline from a year earlier.

Many dark clouds continue to hover over the market, which is increasingly attracting overseas investors.  Millions of homeowners continue to struggle with underwater mortgages and worry bout their economic fortunes as deployment remains stubbornly high through improving.  Many experts, though, expect that it will take years for the financial fortunes of most Americans to improve.

“Weak demand, declining home prices and the lack of credit availability are weighing heavily on the market, which is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork,” says RealtyTrac CEO James J. Saccacio in a  statement.

–Jonathan Berr