Actual home foreclosures decreased in the first quarter 2010, marking the third consecutive quarter with decreasing foreclosures in Washoe County. Compared to 4q09, actual foreclosures decreased 30% as “only” 476 homes in the Reno-Sparks area reverted back to the banks. The year-over-year decline was similar, with a 32% decrease in foreclosures compared to last year. While this is certainly good news, it’s still too early to start celebrating the end of the housing crisis — other measures of distress in the area’s housing market paint a much different picture, so I think what’s really happening here is that banks are just taking longer to foreclose on homes in default.
Looking at the Notices of Default (NODs) issued by lenders to homeowners who are at least 90 days late on their payments, it is clear that there is still a great deal of instability in this market, and more and more homeowners are falling behind on their mortgages. Using default data obtained from Ticor Title, NODs were up 24% in the first quarter 2010 from 4q09, and up 5% compared to 1q09. This “leading” indicator for foreclosures tells me that there are more foreclosures coming in the next few months — it all depends on how long it takes the banks to work through the backlog.
Still, with the housing market being in such bad shape, we’ll take whatever small victories that we can. With actual foreclosure activity trending down over the last several months, perhaps it will give distressed homeowners more time to restructure their debt to allow them to stay in their homes. With unemployment hovering around record levels in Washoe County, housing recovery is going to be slow. JOBS are the critical statistic to watch — once jobs start returning to the area, only then will we start seeing a meaningful reduction in the area’s housing distress.
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