Homeowners feel effects of high foreclosure filings
by Matt Shinall
Aug 15, 2010 | 2537 views | 0 0 comments | 16 16 recommendations | email to a friend | print
Foreclosure sale signs are posted on a home at the entrance of a Bartow County subdivision. The county has seen a decline in foreclosure filings after witnessing a high in April. SKIP BUTLER/The Daily Tribune News
Foreclosure sale signs are posted on a home at the entrance of a Bartow County subdivision. The county has seen a decline in foreclosure filings after witnessing a high in April. SKIP BUTLER/The Daily Tribune News
It has now been a few years since the housing bubble actually burst, but foreclosure rates remain high, continuing to inundate the market with pressured sales forcing down prices and eventually property values.

Online foreclosure database RealtyTrac reported Thursday that foreclosure filings, including default notices, scheduled auctions and bank repossessions for the month of July, totaled 325,229 properties nationwide. That number was a 4 percent increase since June but a year-over-year 10 percent decrease. The country has not seen filings fall below the 300,000 mark since Nov. 2008.

Bartow County in particular has seen a steady decline in past months after reaching a staggering high of 216 filings in April of this year, reporting 136 filings in July, a low not seen locally since January, according to RealtyTrac records.

Although this flood of lender-owned homes has deeply affected the marketplace for buyers and sellers of real estate, the typical homeowner is only indirectly affected by such transactions and these numbers are not sole indicators of property value. Chief Appraiser with the Bartow County Board of Assessors Michael Floyd explained how foreclosures can lead to a decrease in property values.

"It will affect the value, but just the foreclosure itself does not. It is when the bank resells it. Which the bank wouldn't have it for sale if they didn't foreclose on it," Floyd said.

The ensuing dilemma is when studying property values, tax assessors by law must take bank sales into account just as they would a "true" or "arm's length" sale, which Floyd said are nearly 90 percent of the time sold below fair market value.

"When you filter in the bank sales from the banks who are just unloading the property, the property value just drops, and there has been a tremendous increase in that," Floyd said, adding that Georgia House Bill 233 passed in 2009 was responsible for the classification of bank sales being included in property value studies. He is now being addressed regularly by home owners upset with their diminishing property values due to regulations imparted by state legislature.

"They don't understand the ramifications of what they do when they make these laws, and you filter in these bank sales, it destroys property values. I've got the most upset people this year than there's been because their property values went down," Floyd said. "They don't want their property values dropping and I can't help it -- I'm just following the law."

In 2009, there were 582 bank sales in Bartow County, Floyd said, with probably just as many high pressure short sales unaccounted for. The median of those 582 bank owned property sales was 18 percent below fair market value, he added. As for property retaining its value, Floyd noted that older neighborhoods in which homes are often owned outright have continued to sell at or near market value, whereas newer subdivisions have been hard hit by foreclosures.

George Willis, owner and broker of George F. Willis Realty, has served Bartow County since 1988 and has seen firsthand the impact of recent trends, stating that between 60 percent and 70 percent of his current customers have lowered their prices more than once.

Specializing in commercial and industrial properties but maintaining a presence in residential realty, he has seen the marketplace effects of increased foreclosures in every arena.

Emphasizing the number of pressured sales, he noted that according to First Multiple Listings Service, there were 511 listings at $200,000 or less in Bartow County as of Aug. 13 -- a quarter of those were in some state of distress including short sale, foreclosure and lender owned. Of the 190 listings at $100,000 or less in Bartow County, 40 percent were in distress.

"Until the excess inventory, which includes new homes that haven't been sold and foreclosures, are off the market, then you don't have a lot of interest in the regular market by the buying public because they're going after these deals. So most buyers are going after these distressed properties," Willis said.

In April, an $8,000 tax credit for first-time home buyers ran out at which time those looking to purchase a house pulled the trigger and took advantage of the opportunity, creating a void of buyers immediately thereafter. Now, record-low mortgage rates have created another incentive and the strongest buyer's market in 20 years, Willis said. BankRate, an aggregator of financial rate information, reported Wednesday that national mortgage rates hit a record low for the fourth week in a row, with an average conforming 30-year fixed mortgage rate at 4.57 percent.

However, with a public that is unwilling to spend and uncertainty in the market, Willis sees a deeper slump to come and a slower recovery than many are reporting on a national level.

"Although mortgage rates are at all time lows, the residential market hasn't bottomed out yet. You'll read some things from politicians and so forth that want to paint a brighter picture but it just isn't the case," he said. "We're looking at a minimum, an absolute minimum, of three years before things might look better and the best estimates are six to seven years before some normalcy returns to the market."