Two real estate analytics firms – CoreLogic and RealtyTrac – released foreclosure data Thursday, showing a lopsided housing recovery that is largely driven by local market economics and state-specific foreclosure procedures.
In other words, it’s difficult to get an exact national gauge on what's happening in the foreclosure universe since the numbers are largely contingent on what happens with local employment, regulations and even the types of default procedures allowed in individual states.
A new CoreLogic (CLGX) report shows foreclosures falling 19% year-over-year in February. But that’s just for the month of February. The research firm says 54,000 foreclosures were completed last month, down from 67,000 a year earlier and 58,000 in January.
So is this improvement? It is, but maybe not as much as expected when accounting for RealtyTrac’s analysis of the entire first quarter.
RealtyTrac looked at the first quarter of 2013 and declared the number of properties in some stage of foreclosure or bank-owned actually rose 9% from the first quarter of last year.
The good news is the foreclosure inventory is down to 1.2 million, according to CoreLogic. And that’s a notable 21% drop from 1.5 million a year earlier.
But judicial foreclosure states still lag behind.
The states with the highest foreclosure inventory rates include Florida, New Jersey, New York, and Illinois—all judicial foreclosure states. Nevada is the only nonjudicial foreclosure state to crack the top five in terms of its foreclosure inventory.
But when taking a look at the five states with the lowest foreclosure inventory rates, at least two – Nebraska and North Dakota – are also judicial foreclosure states.
So what accounts for this split?
Nebraska and North Dakota overall maintain strong local economies. Based on Labor Department Statistics, the two judicial foreclosure states maintain the lowest unemployment rates in the nation. North Dakota’s rate is extremely low at 3.3%, while Nebraska’s comes in at 3.8%.
Wyoming and Montana also have unemployment rates well under 6%, with Wyoming’s rate hovering at 4.9% and Montana’s at 5.7%.
Coincidentally, the five states with the highest percentage of foreclosure inventory maintain unemployment rates well above the national rate of 7.7%. Nevada is a nonjudicial foreclosure state, so it seems they should be faring better and recovering faster than judicial foreclosure states.
But the state has another strike against it—namely an unemployment rate of 9.7% as of January.
Florida’s unemployment rate held at 7.8% in January, and New York, Illinois and New Jersey all have unemployment rates between 8.4% and 9.5%.
Overall, CoreLogic’s Thursday report was positive.
"We continue to see a declining trend in foreclosure activity, with major markets leading the way," said Anand Nallathambi, president and CEO of CoreLogic. "The drop in delinquencies and foreclosure starts will help support a resurgence in the home purchase market this year and next."
Judging by the data, local unemployment rates remain a strong headwind for local real estate markets, whether they're classified as judicial or nonjudicial.
Jay Brinkmann, the MBA’s chief economist and senior vice president of research and education, reiterated to HousingWire earlier this year that job development remains a long-term factor in how housing fares in the future.
"We are better than we were," Brinkmann said on the jobs front. "But we haven’t seen robust job growth," he said.