VOL. 129 | NO. 11 | Thursday, January 16, 2014
Shelby County Foreclosures Fall 15 Percent in 2013
By Andy Meek
Foreclosures in Shelby County continued to head south in 2013, as they have for most of the past few years.
Over the past 12 months, residential foreclosures in the county fell 15 percent to 3,563 from the 4,189 in 2012, according to real estate information company Chandler Reports, www.chandlerreports.com.
Commercial foreclosures dropped 10 percent for the year, with 89 in 2013 compared with 99 in 2012.
The decline in residential foreclosures for the year follows a 5 percent gain in foreclosures in 2012, which followed a 14 percent slump in 2011. The decrease in 2013, according to broker Regina Hubbard, has helped improve the area’s real estate market, and she expects the slide to continue in 2014.
At the same time, United Housing Inc. executive director Tim Bolding maintains that even though the foreclosure rate is coming down, inventory – especially the so-called “shadow inventory” – is still high.
Shelby County’s 3,563 foreclosures in 2013 included residential properties owned an average of almost 10 years before the foreclosure. The 2013 residential foreclosures included 707 conventional fixed-rate mortgages and 341 conventional adjustable-rate mortgages, among foreclosures for which a loan type was known.
Most of Shelby County’s 30 or so ZIP codes saw a decrease in foreclosures between 2012 and 2013. Some of the biggest decreases were found in North Memphis’ 38107 ZIP code (58 foreclosures in 2013, a 33 percent decrease from 86 in 2012), and the 38112 ZIP code of Rhodes College (44 filings, a 37 percent decrease from 70 the previous year).
“Many of the loans from the subprime era have worked through the foreclosure process,” said Greg Glosson, 2014 president of the Memphis Area Association of Realtors. “Banks are much more likely now to try and accommodate borrowers through the short sale process or other means to keep homeowners in their homes. As prices improve in the market, many borrowers who were underwater two or three years ago may find themselves in a better position for a short sale or normal sale, eliminating many homes that might otherwise be in the foreclosure inventory.
“In most areas of our market, there are fewer homes available for sale. This change in inventory, along with fewer bank-owned homes available, has helped to raise values. In many cases, bank-owned homes sold for less than traditional owner-occupied homes in the same area.”
Foreclosure data for the area can arguably be somewhat noisy. From 2010 to 2011, the county saw a 14 percent drop in foreclosures – a drop that was somewhat artificial, in that there were natural patterns at work as well as banks moving more slowly to process paperwork and borrowers pursuing mortgage modifications.
Foreclosures Down 19 Percent In Fourth Quarter
Foreclosures and foreclosure notices were both down in 2013, but the declines of both were even sharper in the fourth quarter.
Foreclosures fell 19 percent in Shelby County in the fourth quarter of 2013 compared with the same period in 2012, according to real estate information company Chandler Reports, www.chandlerreports.com.
Overall, 751 foreclosures were filed in the fourth quarter, down from 923 in fourth quarter 2012.
Likewise, the number of foreclosure notices also declined. Banks and lenders sent 1,292 notices during the just-ended quarter, down 31.7 percent from the 1,891 sent in fourth quarter 2012.
Foreclosure notices are a first step in the process. They’re sent to borrowers in default but don’t necessarily mean a home will be sold at a foreclosure auction, because the borrower ideally would be able to work out an alternative arrangement when possible.
As banks got more conservative, they made fewer loans, which means fewer loans available to go bad.
The following year, 2012, saw a 5 percent gain – which didn’t necessarily spell a return to normal, since it was only a small gain off of what some industry professionals considered an outlier year.
As Glosson explained, a variety of forces are still at work to stave off foreclosures, helping drive an even bigger decrease in 2013 than the county has seen in a while.
2013’s drop was noteworthy because that year also was a countywide reappraisal year, meaning every property’s value in Shelby County was adjusted to bring it closer into line with its current market value since the last reappraisal four years earlier.
Foreclosures complicate that process somewhat, because those properties have a halo effect on home values around them and make it more difficult for the assessor to accurately identify values.
Meanwhile, when it comes to foreclosure notices, which are the first warning that a home is in danger of being seized by a bank or lender, the drop in 2013 was even steeper than the decline in actual foreclosures over the past 12 months. 2013 saw a 15 percent drop in foreclosures, but a 22.1 percent drop in foreclosure notices.
And that decline in notices was widespread. Every Memphis-area ZIP code but one, South Memphis’ 38126, saw notices drop last year.
Chandler Reports is a division of The Daily News Publishing Co. Inc.