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By Samuel Weigley, Alexander E.M. Hess & Michael Sauter, 24/7 Wall St.
In the second quarter of 2012, there were 986,355 completed home sales across the United States, according to RealtyTrac. Of those, 22.8 percent were ?foreclosure sales,? which means that homes were either actively in default and in the foreclosure process, or the home already had been foreclosed and belonged to the bank at the time of the sale. While the average price of a nonforeclosure sale was $249,090, the average price of a foreclosure sale was $170,040, a 31.8 percent discount.
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Across the country, one in every 236 housing units received a foreclosure notice or moved forward in the foreclosure process in the second quarter of 2012, RealtyTrac notes. However, the rate was much higher in some areas, such as Riverside, Calif., where one in 68.3 homes is in foreclosure. 24/7 Wall St. reviewed the 10 metropolitan areas with the highest foreclosure rates.
Not surprisingly, home prices in the metropolitan areas with the highest foreclosure rates have fallen significantly since most of them peaked in 2006 or 2007. The home prices of all the metro areas on this list fell by more than the national average of 33.3 percent between the first quarters of 2007 and 2012. In five of the 10 metropolitan areas on this list, home prices declined by more than half during that time.
The metropolitan areas on this list are generally in states that have been especially hard hit by the housing downturn. All 10 are located in states that high rates of homes with underwater mortgages. Notably, three of the metropolitan areas are in the California while another three are in Florida. These states had the sixth- and second-highest rates of homes with underwater mortgages, respectively.
Places hard hit by the housing downturn also experienced higher levels of unemployment. As of May 2012, all but one of the metro areas on this list had an unemployment rate higher than the 8.2 percent national rate. Three of the metropolitan areas on the list had an unemployment rate above 10 percent. The high unemployment in these areas is serving as a barrier to housing recovery. Home prices in all 10 of these metro areas are expected to drop in 2012, with home prices in all but one of the metro areas expected to fall more than the U.S. decline of just under 1 percent this year.
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24/7 Wall St. reviewed second quarter 2012 RealtyTrac data to determine the metro markets with at least a million residents and the highest foreclosures rates. Of those metro areas, we also reviewed average sale prices for homes, the number of homes in foreclosure and foreclosure sales figures. From Fiserv, we reviewed home price changes through first quarter 2012 and projections from that time. Because Fiserv and RealtyTrac use different geographies, some Fiserv metro areas were approximations, and are not identical sample sizes.
These are the 10 cities with the most homes in foreclosure.
1. Riverside-San Bernardino-Ontario, Calif.
- Foreclosure rate: 1 in 68.3 housing units
- Avg. sale price (foreclosed homes): $179,762
- Avg. sale price (nonforeclosed homes): $225,000
- Foreclosure sales as percent of total: 47.23 percent
Of all home sales in Riverside-San Bernardino-Ontario in the quarter, 21.4 percent were sales of repossessed properties, much higher than the 11.9 percent nationwide. In addition, a whopping 25.9 percent of home sales in the second quarter of 2012 were preforeclosure sales, significantly higher than the 10.9 percent nationwide. It is not hard to see why: home prices dropped by 54.9 percent between the first quarter of 2007 and the first quarter of 2012, much faster than the 33.3 percent drop in home prices nationwide. Home prices in the area are expected to fall an additional 6.3 percent in 2012, well more than the 1 percent drop across the country. The high unemployment rate of 12.2 percent in the region as of May -- well above the national rate of 8.2 percent -- is likely to continue to burden the housing market for some time.
2. Atlanta-Sandy Springs-Marietta, Ga.
- Foreclosure rate: 1 in 87.6 housing units
- Avg. sale price (foreclosed homes): $106,042
- Avg. sale price (nonforeclosed homes): $181,952
- Foreclosure sales as percent of total: 44.7 percent
With one of the nation?s highest foreclosure rates, it may not come as a shock that 44.7 percent of the homes sold in the Atlanta-Sandy Springs-Marietta area in the second quarter were foreclosed properties. Of these foreclosure sales, 7,814 were repossessed property -- the most in the nation. One likely reason these properties were so popular was their price; the average foreclosed home could be purchased for $106,042 -- a 41.7 percent discount to the price of a nonforeclosed home. Bank-owned homes were even less expensive; $100,220 on average -- a 44.9 percent discount to the average sales price of nonforeclosed homes. Affordable property in the Atlanta area is not limited to foreclosed properties. After home prices fell 38 percent between the first quarter of 2007 and the first quarter of 2012, the area?s median mortgage payment cost just 7.3 percent of median family income -- one of the smallest rates in the country.
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3. Sacramento-Arden-Arcade-Roseville, Calif.
- Foreclosure rate: 1 in 90.3 housing units
- Avg. sale price (foreclosed homes): $185,565
- Avg. sale price (nonforeclosed homes): $251,888
- Foreclosure sales as percent of total: 45.49 percent
Of the 13,327 home sales in the Sacramento metro area during the second quarter, 22 percent were repossessed properties, while another 23.4 percent were in the preforeclosure process. But the discount of 26.3 percent in buying a foreclosed home is slightly less than the 31.7 percent discount across the U.S. Sacramento?s unemployment rate of 10.8 percent as of May 2012 was far above the national rate of 8.2 percent, which could hinder housing growth in the near future. While home prices are expected to fall 2.2 percent in 2012, more than the national drop of just under 1 percent, prices are expected to rise by 8.1 percent in 2013, better than the 5 percent price growth expected across the country.
4. Phoenix-Mesa-Scottsdale, Ariz.
- Foreclosure rate: 1 in 92.1 housing units
- Avg. sale price (foreclosed homes): $144,235
- Avg. sale price (nonforeclosed homes): $191,263
- Foreclosure sales as percent of total: 33.46 percent
After peaking in the second quarter of 2006, home prices in the Phoenix area fell by 52.7 percent through the first quarter of 2012. These huge price declines have made the area?s housing market very popular with homebuyers, who bought 39,531 homes in the second quarter of 2012, the third highest number of sales among all metro areas in the U.S. One third of these homes were foreclosed properties, selling at an average discount of 24.6 percent to the average price of homes not in foreclosure. Though foreclosed homes are already cheap, selling at less than the $170,040 nationwide average for such properties, area home prices are expected to fall by an additional 9.5 percent in 2012. In the first quarter the median mortgage payment in the area cost 11 percent of median family income, down from 28.4 percent when prices were at their peak.
5. Las Vegas-Paradise, Nev.
- Foreclosure rate: 1 in 95.9 housing units
- Avg. sale price (foreclosed homes): $122,987
- Avg. sale price (nonforeclosed homes): $145,079
- Foreclosure sales as percent of total: 44.7 percent
The Las Vegas metro area has been crushed by the housing downturn with home prices falling 60.8 percent between the first quarter of 2007 and the same quarter in 2012, nearly double the national rate. Improvement is not on the horizon either, with home prices expected to fall an additional 7.9 percent in 2012 and 1.1 percent in 2013. Since home prices dropped so much in the region, a foreclosed home is not sold at as much of a discount as in other parts of the country. While the average home buyer in the U.S. can expect a 31.7 percent discount on a foreclosed home, a home buyer in the Las Vegas area can only expect a discount of 15.2 percent. To make matters worse, the Las Vegas May 2012 unemployment rate was 11.8 percent, well above the 8.2 percent national rate. This could hamper a strong housing recovery in the region.
Click here to read all of 24/7 Wall St.'s Cities with the most homes?in foreclosure?
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