Foreclosures in Chattanooga 35% below rate across U.S.

Foreclosures in Chattanooga 35% below rate across U.S.

July 31st, 2009 in Business Around the Region

Despite a nationwide jump in foreclosures during the first half of the year, the number of default notices filed against Chattanooga houses fell nearly 7 percent in the first six month of 2009, according to a foreclosure report released Thursday.

RealtyTrac, an online service for foreclosed properties, estimates foreclosures were initiated on 1,759 houses in metropolitan Chattanooga in the first six months of 2009, or about one of every 130 properties in the six-county area. Chattanooga's foreclosure rate so far this year is running 35 percent below the U.S. average, reflecting the relatively more stable housing market across Tennessee, experts said.

"There are still a lot more foreclosures than in years past and some of the recent decline may simply reflect the increase in "short sales" before the property goes to foreclosure (when buyers buy troubled properties shortly before the foreclosure)," said Randy Durham, a broker for Keller-Williams and president-elect of the Chattanooga Association of Realtors. "But I still think we're far better than the national market and we should see increased sales and prices in the future if rates remain low and more first-time homebuyers take advantage of the new $8,000 tax credit."

RealtyTrac estimates foreclosure notices were down in each of Tennessee's four major metro areas during the first six months of the year compared with the same period in 2008.

William Fox, director of the Center for Business and Economic Research at the University of Tennessee, said housing prices and building starts didn't rise as much in previous years in Tennessee as in markets like Florida, California, Nevada and Arizona.

But those states with the biggest price appreciation in the past are now suffering the biggest foreclosure rates as more homeowners faced with falling prices simply walk away from their homes.

"The increase in home prices relative to people's income didn't reach the levels here that we saw in many other states in the past, and that tends to keep foreclosure activity down today in Tennessee relative to other states," Dr. Fox said.

Nationwide, home prices have fallen 21 percent since peaking in July 2006, according to the National Association of Realtors in Chicago. But Chattanooga home prices are down, on average, only 13.3 percent in the same period.

June was the second consecutive month of higher home sales through the Chattanooga Association of Realtors and was the highest monthly sales total since September. The 553 houses sold through the Chattanooga Realtors' multiple listing service in June were still down 8 percent from a year ago, however.

RealtyTrac estimates Las Vegas area had the highest rate of foreclosure filings among major U.S. cities, with 7.5 percent of households receiving a default or auction notice or being seized by a lender during the first half of 2009. The foreclosure rate in Las Vegas was nearly 10 times higher than in Chattanooga.

Nationwide, the number of foreclosures in the first half of 2009 was up nearly 15 percent over the same period of 2008.

"Foreclosure activity continued its upward trajectory nationwide and in the majority of metro areas in the first half of the year," James Saccacio, chief executive officer of RealtyTrac, said in a statement.

More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, RealtyTrac said.