At the height of the housing crisis in 2007, six Richmond County homes went into foreclosure every day.
Now it is three.
An analysis of foreclosure filings shows the foreclosure crisis has been waning in 2013. From January through September, filings in Richmond, Columbia and Aiken counties are down 28 percent compared to 2012.
And there is no single answer as to why.
Simon Medcalfe, a finance professor at Georgia Regents University, said having more jobs in the area has made an impact.
“Employment in Augusta is up 3.2 percent from its lowest point,” Medcalfe said. The information comes from a report from the Federal Reserve Bank of Atlanta covering economic data from August.
Because of the federal government shutdown, the latest job numbers available for Georgia are from August. The Georgia Department of Labor reported 216,600 jobs in the Augusta metro area in August, up 800 jobs from July, and up 3,800 jobs from August 2012.
In looking at the foreclosure numbers, Medcalfe said there is a correlation between the job growth and the decline in foreclosures.
“Roughly, if employment increases by 1,000, foreclosures decrease by about 10 per month,” Medcalfe said in an e-mail.
According to monthly data from RealtyTrac, an online real estate marketplace that’s been following the foreclosure crisis since it started, there were 2,123 foreclosure filings in the three counties from the beginning of the year to September. At that point last year, there were 2,972 filings.
When the housing bubble burst, foreclosures in Richmond, Columbia and Aiken counties increased from 1,700 in 2005 to 2,900 in 2006.
Foreclosure filings stayed around 2,800 annually for 2007 and 2008 and then the recession drove them up. There were 3,300 in 2009 and 3,800 in 2010, which was the peak.
In the economic recovery in 2011, foreclosure filings fell to 3,200, but jumped back to 3,600 last year.
Filings this year are on pace to be between 2,800 and 3,000.
Daren Blomquist, a vice president with RealtyTrac, said conditions nationally have been improving all year.
“They think we’ve gotten through the worst of the bad loans that triggered this foreclosure crisis. And the improving economy has certainly lifted all boats,” Blomquist said.
RealtyTrac tracks default notices, scheduled auctions and bank repossessions. It reported that September was the 36th consecutive month with an annual decrease in U.S. foreclosure activity, a downward trend that started in October 2010 when lenders and servicers were accused of improperly signing off on foreclosure documents with a practice dubbed robo-signing.
Not only can job recovery stave off foreclosures, but the improvement in the housing market can, too. Blomquist also said people are more apt to stay in their homes as they see home prices rise. Prices nationally have been increasing, resulting in fewer “strategic foreclosures” where owners get into a new home and then walk away from the bad mortgage.
Amanda Hollimon with Blanchard & Calhoun Real Estate Co. said she’s seen a lot of people stay out of foreclosure by using short sales.
“Banks initially thought they would play hardball and tell people they were going to foreclose on them and the sellers were not able to do anything about that,” Hollimon said. “Later on, they realized they were owning a lot of inventory.”
It is more costly to get rid of a foreclosure home than it is to take a small loss on a short sale. Foreclosure costs include legal fees and usually result in a home selling for a larger loss against the value of the mortgage than a short sale, Hollimon said.
Hollimon said she’s seen more willingness on the part of banks or other mortgage holders to do a short sale and accept a home sale for less than the mortgage value, as well as educate those involved in the process.
Blomquist agreed that short sales are better for the lenders’ bottom line. One of the reasons lenders are more open to accepting short sales is that it is one of the approved forms of relief stemming from the 49-state, $25 billion settlement last year with the five biggest banks in the nation.
Another consequence of short sales is that it helps home values in the neighborhoods around those houses. In the negotiations for home sales, appraisers will look at recent home sales of comparable houses to determine values. Foreclosure homes lower those values, Hollimon said.
Hollimon said she’s also seen clients adapt to the current economic conditions by getting rid of second properties or unneeded vehicles in order to adjust their lifestyle to keep their home.
Blomquist also suggested lower numbers might be a consequence of a court case out of Atlanta in 2012 that required lenders to be more careful in filing paperwork.
“Immediately following that court ruling ... we did start to see the numbers go down in Georgia,” Blomquist said.
However, the downward trend continued past the time that housing experts thought they would bounce back after lenders adapted to the rule change on documentation, in a similar fashion to the robo-signing controversy causing a temporary halt to foreclosure filings.
“It shows no sign of abating. It appears we’re seeing a broad-based recovery that is allowing homeowners to avoid foreclosure,” Blomquist said.