A Lull Before the Next Wave of Bank Foreclosed Houses

by on Foreclosure Crisis

Foreclosure has started to ease in some cities across the country where the large volume of bank foreclosed houses caused devastation on their housing markets and economies. However, industry experts are quick to point out that the current development could be just a lull before the next wave of foreclosure which they expected to hit some unlikely cities.

In the first half of 2009, the bulk of bank foreclosed houses were located in the cities of Arizona, California, Florida and Nevada. Twenty-nine cities from the four states were among the top 30 in the list of places with highest foreclosure rates. The Colorado city of Greeley was the odd place on the list dominated by cities from the four states.

But recent market data showed that some of the cities hardest hit by foreclosures, such as California’s Central Valley cities, showed some improvement by posting declining foreclosure rates.

However, industry experts said that a third wave of bank foreclosed houses is looming in cities with over one million populations. The first wave of foreclosures was due to the subprime mortgage collapse. The second wave of the foreclosure crisis was triggered by massive layoffs and the economic consequences of the subprime collapse.

Experts said that the anticipated resetting of the option-adjustable rate mortgage (ARM) will trigger the third wave of foreclosures.

One of the cities that was not pummeled by foreclosures the past year is Seattle, Washington. The city posted the highest rate increase in foreclosure filings in the first half of this year. Data showed that one out of 107 homeowners in Seattle received notices of foreclosure, representing a 72 percent increase compared with the same period the previous year.

Seattle is followed by Minneapolis, Minnesota where 1 out of 90 households received foreclosure filing, a jump of 58.6 percent. Phoenix, Arizona is third on the list with filings on one out of 22 houses, representing an increase of 51.7 percent.

Some cities that showed significant declines in foreclosure filings are New York by 23.5 percent, Boston, Massachusetts by 40.7 percent and Houston, Texas by 31.3 percent.

Leading the highest foreclosure filing list is Las Vegas, Nevada with 56 percent increase. The city took the lead from Stockton, California by posting foreclosure filing on one out of 13 properties from January to June.

Six California cities are among the top 10 places with the highest filings for bank foreclosed houses.