LOS ANGELES - The number of U.S. homes in foreclosure more than doubled in the third quarter, a surge that analysts said will likely drive already weak prices even lower in the hardest-hit areas.
While that amounts to good news for would-be buyers, it spells trouble for builders with projects languishing on the market and for other homeowners desperate to unload property to avoid foreclosure.
“A wave of foreclosures is not going to be good for the broader market, and it will contribute to the weakness in pricing,” said Raphael Bostic, associate director of the Lusk Center for Real Estate at the University of Southern California.
A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, nearly doubling from 223,233 properties in the same period one year ago, Irvine-based RealtyTrac Inc. said Thursday. The latest figures amount to one foreclosure filing for every 196 households in the nation and reflect a 33.9 percent jump from the 333,731 properties in foreclosure in the second quarter of this year.
In Arizona, 22,750 foreclosure filings were reported in the third quarter 2007 — a 203.1 percent spike from a year ago, according to the RealtyTrac report. That’s one filing for every 112 households. The state also had the nation’s seventh highest foreclosure rate.
Some 10,174 foreclosure filings were recorded in Maricopa County during the three-month period, a 237.7 percent jump from 2006. Pima and Pinal counties saw filings rise 96.2 percent and 344.9 percent, respectively, from a year ago.
California led the nation in total foreclosure filings and reported one filing for every 88 households. The state had 148,147 filings on 94,772 properties, an increase in filings of 36 percent from the previous quarter and nearly four times the filings during the same period a year ago.
All but five states — Kentucky, New Mexico, Oklahoma, South Dakota and Utah — reported a year-over-year increase in foreclosure filings, which include notices of default, auction sale notices or bank repossessions, RealtyTrac said. The total number of filings reported for the nation in the third quarter reached 635,159, nearly double the level of the year-ago quarter and up 30 percent from the second quarter of this year.
Total filings were greater than the number of properties targeted because a single property can sometimes receive more than one notice in a three-month period.
Mortgage lenders are bracing for a flood of defaults as many adjustable-rate mortgages originated in 2005 and 2006 during the height of the housing market frenzy reset to higher interest rates.
Along with California, other states with the highest foreclosure rates during the third quarter were Nevada and Florida. All three saw massive, speculator-fueled construction of homes and condominiums. Many were sold to subprime borrowers with shaky credit histories.
Nevada reported one foreclosure filing for every 61 households, with 16,817 filings on 12,982 properties. That marked a 22.8 percent increase in filings from the previous quarter and a tripling from the same quarter a year ago.
Rounding out the top 10 states in foreclosure rates were Michigan, Ohio, Colorado, Arizona, Georgia, Indiana and Texas.
Even with foreclosure-driven price declines, many buyers are likely to hold out for even better deals.
“What is keeping people away is this uncertainty about whether or not prices will continue to fall,” said Sam Chandan, chief economist for Reis, a New York-based real estate research firm.