Foreclosures, bankruptcies down as economy improves

Foreclosures, bankruptcies down as economy improves

April 26th, 2012 by Dave Flessner in Business Around the Region

Illustration by Laura McNutt /Times Free Press.


In the first three months of 2012, the top states were:

1. Tennessee, 7.19 filings per 1,000 residents

2. Nevada, 7 filings per 1,000 residents

3. Georgia, 6.65 filings per 1,000 residents

4. Utah, 5.87 filings per 1,000 residents

5. Alabama, 5.87 filings per 1,000 residents

Source: American Bankruptcy Institute


The rate of foreclosures for metro cities in the Mid-South in the first quarter was:

• Atlanta, one of every 90 households

• Macon, Ga., one of every 160 households

• Memphis, one of every 272 households

• Birmingham, Ala., one of ever 286 households

• Nashville, one of every 293 households

• Chattanooga, one of every 325 households

• Knoxville, one of every 420 households

• Huntsville, Ala., one of 530 households

• Tri-cities in Tennessee, one of every 850 households

• U.S. average, one of every 230 households

Source: RealtyTrac

The number of Chattanoogans going broke or defaulting on their mortgages fell below the year-ago level this winter as the job market, home prices and economic confidence all showed signs of improvement in early 2012.

But foreclosure notices in the first quarter still were up from the fourth quarter of 2011 in Chattanooga and a majority of other metro markets, according to data released today by the online services, RealtyTrac.

Tennessee also led the nation in the rate of personal bankruptcy filings in the first quarter.

"First quarter trends were a mixed bag," RealtyTrac Brandon Moore said in releasing the quarterly foreclosure results. "While the majority of metro areas continued to show foreclosure activity down from a year ago, more than half reported increasing foreclosure activity from the previous quarter -- an early sign that long-dormant foreclosures are coming out of hibernation in many local markets."

With one foreclosure notice for every 325 households in the first quarter, Chattanooga's foreclosure rate was 30 percent below the U.S. average.

Chattanooga's housing market appears to be recovering better than most. A recent study by Inman News , a real estate information service, ranked Chattanooga as the fifth best real estate market to watch in 2012.

Compared with a year ago, the median price of homes sold in the Chattanooga area during the first quarter was up 6.4 percent to $133,000, according to the Greater Chattanooga Area Realtors.

Mark Hite, president of the local Realtors group, said the higher average selling price "indicates a positive turn" in the market.

"Our area is definitely showing the signs of transition from a buyer's market to a seller's market," he said.

Stan Humphries, chief economist for Zillow, predicts 2012 will be a "transitional year" in the housing recovery nationwide with prices likely to bottom out this year and sales expected to increase.

"While home values are expected to fall further [another 2 to 4 percent] in 2012 with a definitive bottom probably a year away, encouraging precursors to a true stabilization of home values are falling into place as the new year begins," Humphries said in a recent forecast.

RealtyTrac said the number of Chattanooga properties receiving a notice of default or foreclosure for bad mortgage debts fell in the first quarter by 27 percent from the same period a year ago. But foreclosure notices also were up more than 11 percent from the pace in the final three months of last year when some banks were still negotiating with regulators and customers over disputed paperwork on many defaulted loans.

A settlement of those disputes by attorneys general in all 50 states earlier this year has allowed banks to move forward with more foreclosures.

While foreclosures were below the U.S. average in Chattanooga, Atlanta's foreclosure rate was nearly two and a half times higher than the national average, according to RealtyTrac.

The Case-Shiller Home Price Indices report for major markets released this week showed that median home prices in Atlanta were down last month by 17.3 percent from a year ago -- the biggest drop on any of the 20 markets included in the study.

Home prices in the Atlanta region fell to 1996 levels during March, according to the study.

Chattanooga, which didn't enjoy as big of a real estate boom as Atlanta in the previous decade, now is faring much better.

Bankruptcy filings by Chattanoogans seeking court protection from debtors were down in the first quarter for the second consecutive year. The 1,708 bankruptcy filings in the Chattanooga office of the U.S. Bankruptcy Court during January, February and March was 6.8 percent less than the number of filings in the same period a year ago.

Nationwide, court filings were down an even stronger 12 percent in the first quarter.

"With the economic recovery weighed down by the distressed housing market and high unemployment, consumers and businesses are continuing to cut their debt burdens," Samuel Gerdano, executive director of the American Bankruptcy Institute, said in a report on the first quarter filings. "We expect that 2012 bankruptcy totals will be less than last year as companies and families remain vigilant in cutting costs and shoring up their balance sheets."

Despite the improvement, Tennessee, Georgia and Alabama still remained among the top states for the highest rate of bankruptcies in the first quarter. Tennessee's per capita filings during the first three months of 2012 were 77 percent higher than the U.S. as a whole, according to ABI.

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