Driving South on Interstate 75 in Marietta, GA everyone on their way to work looks up to see the big realty company sign that tells how many listings are on the market, waiting to be sold. The numbers have finally made it back in the 70,000 range which is what we used to call "normal" when referring to the then thriving Georgia Market. We may be tempted to give a sigh of relief that things are finally returning to "normal," but the numbers portray a false security.
May's foreclosure statistics reported the third largest number in history of U.S. properties with foreclosure activity. Although the number was down 6% from April, still 321,480 homes showed filings for foreclosure, notices of default, or were marked for auction and repossession. May also was the third straight month of national foreclosures exceeding the 300,000 homes mark. According to a report put out recently by RealtyTrac®, 1 in every 398 U.S. homes received a foreclosure filing in May. Georgia is currently ranked 7th in properties with foreclosure filings. In Georgia, 1 in every 377 homes is involved in foreclosure activity, a figure slightly under the national average.
Though there may seem to be signs of less homes on the market, and thus the return of a healthy, more stable real estate economy - the problem lies in the reality of a flood of foreclosures that has been dammed up by various state regulations and the Obama administration's requests in the form of an imposed moratorium since October 31, 2008. That moratorium was lifted March 31st, and now banks and mortgage companies are aggressively engaging their previous process and policies of foreclosure regarding delinquent homeowners. We haven't seen the effects of the flood yet because evictions and notices take time. But be assured, it's coming. RealtyTrac's executive officer James Saccacio stated this month "We expect REO activity to spike in the coming months as foreclosure delays and moratoria implemented by various state laws come to an end."
Many people have been living in their homes for 6 months to a year without making payments, and without so much as a peep from their mortgage company. Many lenders had slowed or stopped their foreclosing on borrowers waiting for clarification on Obama's housing-rescue plan introduced in February, and the possible incentives accompanying it. Other mortgage companies delayed foreclosures simply trying to deal with and strengthen their own programs to withstand the onslaught of the first wave and to comply with the changes in state laws. But now with the moratorium lifted, the dam has begun to crack, and the force of the waters behind it is great - and these guests who have overstayed their welcome are being told to pack their bags -- quickly.
The effects of this 2nd wave of foreclosures on the real estate industry and the economy at large are uncertain. Some experts expect more than 2 million homes to be foreclosed on in 2009 and that this flood of properties may cause further decline in home prices of up to 20%. So, I guess it's fair to say we're not out of the woods yet. At the same time though, it's not all doom and gloom. With the second wave of foreclosures on the way, the agents who have survived through grit and professional determination, savvy investors, and homebuyers have a chance to ride the wave -- this time with more experience, more opportunity, and potentially more incentives than ever before. I have hope that, although the real estate industry led the way in getting us into this mess, it will also lead us the way out.
Lee Graham is an Associate Broker and owner of The Graham Group, a premier team of real estate professionals specializing in Atlanta Real Estate. Their areas of expertise include Residential, Foreclosures, and Short-Sales. View more information at www.AtlantaGroupRealEstate.com.