Foreclosures Plunge First Half of 2011 – Will Return in 2012

In the first half of 2011, foreclosure filings fell 29% compared to the first half of 2010. They were down 25% from the last half of 2010. Through June 30, 2011, 1.2 million homeowners, or one in every 111 households, received a foreclosure filing according to RealtyTrac.

Second quarter filings were at 608,235, the lowest quarterly total since the end of 2007. But, these numbers aren’t due to any improvements in the economy, unemployment, the housing market, or consumer sentiment. It’s all about bank backlogs and the aftermath of the robo-signing scandal. Banks have pushed foreclosures to the back burner while they improve their processing on the legal side.

The average time from the initial foreclosure notice to the final sheriff’s or trustee’s sale rose to 318 days in the second quarter, up nearly 7% from 298 days in the first quarter and up 15% year over year. In New York the average process takes around 966 days, in New Jersey 944, and it’s 676 days in Florida. Texas is the fastest, at 92 days, followed by Virginia at 106.

RealtyTrac estimates that more than one million foreclosures that should be filed in 2011 are now going to be pushed into 2012. It’s just postponing the inevitable. While it does allow breathing room for many homeowners to try and improve their situation and keep their homes, most will move through the foreclosure process anyway.

Banks have been careful to space out foreclosures, and are expected to continue to do so, as they don’t want too many to hit the market at once. This would only exacerbate the falling prices. Nevada is still the top foreclosure state, with one in every 21 households receiving a foreclosure notice in the first half of this year. The other nine of the top ten are Arizona, California, Utah, Georgia, Idaho, Michigan, Florida, Colorado, and Illinois.

For real estate investors, this just means that you’re not at the end of the opportunities. There is going to be another year of foreclosure bargain-hunting. Whether flipping or holding for long term rental, there seems to be plenty of time to make a plan and jump into the market.