Foreclosed Homes Finally “Spreading Out” Across All 50 States

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Want to buy a foreclosed home? Spring 2012 may be your best chance yet. A combination of legislation and low mortgage rates have left today's foreclosure market ripe for value.

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Bank REO Rising; Faster Foreclosures Coming

According to RealtyTrac, an Irvine, California-based foreclosure tracking firm, the number of foreclosure filings dropped 19 percent last month as compared to one year ago."Foreclosure filing" is a blanket term comprising (1) Default notices on a home; (2) Scheduled auctions for a home; and, (3) Bank repossessions of a home.

All three foreclosure filing types showed dramatic improvement year-over-year. Default notices and scheduled auctions were down roughly twenty percent and bank repossessions -- sometimes called Bank REO -- fell 15 percent.

At first look, January's foreclosure figures look great for housing. Fewer foreclosures means fewer homes sold "on the cheap" which, in turn, supports higher home prices from Marin County, California to Dade County, Florida.

When we look at the monthly foreclosure data, however, a different story emerges.  

As compared to December 2011, January 2012's foreclosure figures shows a market getting ready for more bank-owned homes.

• Default Notices : Unchanged from December 2011
• Scheduled Auctions : +1 percent from December 2011
• Bank Repossessions : +8 percent from December 2011

This trend toward more bank REO should continue -- especially because of the recent $25 billion mortgage servicer settlement. The settlement provides clear rules to banks and states on how the foreclosure process should work, and gives banks reason to "un-freeze" their respective foreclosure pipelines.

Expect more bank-owned homes for sale in 2012.

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Nevada, California Still Dominate Foreclosures

Since 2007, when the foreclosure market became a "hot topic", foreclosures have been geographically concentrated. Just a few states have accounted for the majority of the nation's overall foreclosure activity.

That is still true today.

Nevada, California and Florida continue to dominate the foreclosure scene. Their dominance, however, is not as strong as it once was.

In looking at Foreclosures Per Capita last month, 13 states fared worse than the U.S. national average. This is a marked improvement over 2009 when just 6 states beat the national average. The data point suggests that foreclosures are "spreading out" nationwide; that they're less concentrated by state. 

Home buyers in every state, and in many towns, may witness more foreclosures for sale nearby this year. Foreclosures are a national occurrence.

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Buying A Foreclosed Home? Don't Buy A Defect.

Expect more foreclosures for sale in 2012. You may want to buy one, too. If you do, though, don't confuse "cheap" for "value". Although foreclosed homes can be deeply discounted, they're often sold "as-is". This means that the home may be sold with defects and damage that make it uninhabitable for humans. 

Mold and absent plumbing are just two problems you may encounter. There are countless more.

When you buy a foreclosed home, make sure to work with an experienced real estate agent. You'll want a professional to review your contracts and help with negotiations. If you go at it alone, you put yourself -- and your household -- risk.

Click to get a mortgage rate.