The Provo-Orem area now ranks among the highest foreclosure-hit cities in the nation, according to a new report. And the problem is expected to persist as the recession continues to send more Utahns to the unemployment line, analysts say.
The number of foreclosure-related filings in Utah County soared 128 percent to 3,168 in the first half of the year, compared with 1,386 a year ago, according to data from RealtyTrac. The report covers filings including default notices, notice of trustee sales and bank repossession notices nationally.
Since March, foreclosure rates in the Provo-Orem area, along with three other Utah metro areas, began rising above that of the national average, said Daren Blomquist, marketing communications manager of RealtyTrac.
The Provo-Orem area now ranks 31st in foreclosure-related filings in the nation, up from 72nd a year ago, with one out of every 45 households receiving foreclosure filings in the first half of the year. That's compared to one out of every 102 households that received foreclosure filings a year ago, and one out of every 84 households nationwide that received foreclosure filings in the same period this year.
"The foreclosure rate in Utah County has now more than doubled from a year ago. Rising unemployment over the past year is now helping to drive more foreclosures in areas like Provo-Orem, Boise, Portland and Seattle, which had appeared to be less susceptible to foreclosures caused by risky mortgages a year ago," Blomquist said.
He said the foreclosure problem in Utah, which began to worsen in the latter half of 2008, is expected to persist through mid-2010 because it is about a year behind several other states -- Michigan, Ohio and California -- where foreclosures started spiking as early as 2006.
"Foreclosures appear to be rising at a faster pace now, because the housing boom in Utah came later than other states, so the bust is coming later too," he said. "Foreclosure rates in Utah took off in the first half of the year because many areas were overinflated in prices and overbuilt in terms of new homes. Combined with declining demand, that left a lot of homeowners, who had expected the housing boom to continue, to be left high and dry. Many had taken out loans that they couldn't continue to pay mortgages on."
Home prices in Utah County shed about 9 percent in June, with median sales prices dropping to $200,000 from $220,900 in 2008, according to the latest report from the Utah County Association of Realtors.
Home sales in Utah County jumped 33 percent to 548 homes in June from a year ago, driven largely by bargain hunters snapping up short sales and foreclosures. A majority of those sales, 416, were for homes priced below $250,000, compared with 261 out of 411 homes sold in the same year-ago period. Currently, one out of every five homes listed in Utah County is a short sale.
"I'm not surprised that foreclosures are creeping up, but our numbers aren't that high that we should be alarmed. There are still federal incentives out there and people are moving quickly to grab that federal tax credit of $8,000 before it ends this year," said Taylor Oldroyd, president of the Utah County Realtors.
Utah now ranks fifth in the nation in terms of foreclosures, up from 17th a year ago, with the number of foreclosure filings jumping 88 percent to 13,496 in the first half of the year, compared with 7,192 a year ago.
"Utah's foreclosure rate began exceeding the national average in March, in part because of rising employment and because the state is finally playing catch-up with problems in the nearby foreclosure-hit states like California, Nevada and Arizona," Blomquist said.
"Investors priced out of California and Nevada during the housing boom years may have looked to Utah as an alternative. So some of the frenzied buying and investing that went on in those states did filter into Utah," he said.
According to RealtyTrac, Salt Lake ranked 58th with one in every 74 households receiving a foreclosure-related notice, while Ogden-Clearfield ranked 59th with one in every 74 households as well, but with a lower percentage of its housing units with a foreclosure filing. The St. George area ranked highest statewide with a rate of one in 28 households receiving a filing, but it was not listed among the top metro areas in the report because of its smaller population.
While the Beehive state is now considered a foreclosure hot spot, foreclosure rates in cities in the top four states are nearly twice as high as that of Utah. Las Vegas posted the nation's highest metro foreclosure rate, with one in 13 households receiving at least one foreclosure filing in the first half of 2009 -- more than six times the national average. At No. 2, one out of every 14 households in Cape Coral-Fort Meyers, Fla. received a foreclosure-related notice.
"Foreclosure activity continued its upward trajectory nationwide and in the majority of metro areas in the first half of the year, but there are some significant differences beginning to show up in the data," said James J. Saccacio, chief executive officer of RealtyTrac.
While some of the most foreclosure-saturated metro areas in Michigan, Ohio, Indiana and California posted declining foreclosure activity in the first six months of 2009, other areas of the country not previously considered foreclosure hot spots have seen increased levels of activity, the report said.
More than 20 percent of the metro areas that showed above-average levels of foreclosure activity were in states such as Utah, Oregon, Idaho, Arkansas, Illinois and South Carolina, suggesting that much of the new foreclosure activity may be more directly related to growing unemployment than continuing fallout from subprime and adjustable rate loans, the report said.
"While some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, new markets like Provo, Utah, and Boise, Idaho, have seen large increases. As unemployment rates increase in different parts of the country, it's very likely that we'll see similar patterns develop elsewhere," Saccacio said.
Posted in Local, Provo, Orem on Friday, July 31, 2009 7:55 am Updated: 3:01 pm. | Tags: Provo, Orem
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