One analyst says the decline is a sign that the local “housing market is beginning to heal”
BY ILENE ALESHIRE
Published: January 17th 2013
Foreclosures in Lane County plummeted by 36 percent in 2012 compared to 2011, and were down by almost two-thirds from their peak in 2010, according to figures released Wednesday by RealtyTrac, a California-based firm that tracks foreclosures nationwide.
For the country as a whole, foreclosure starts were down 28 percent from a year ago to the lowest level since December 2006, according to RealtyTrac. Half of the states saw an increase while the other half — including states with large populations such as California, Texas and Michigan — saw a decrease.
A total of 877 Lane County households — or about one in every 178 — received some sort of foreclosure notice last year, according to RealtyTrac.
The decline in foreclosures locally is “a sign that the housing market is beginning to heal, a trend we expect will continue in 2013,” said John Helmick, CEO of Eugene-based Gorilla Capital, which buys distressed properties, does needed repairs and renovation, and then resells them for a profit.
Helmick said that along with the declining number of foreclosures he has also noticed a change in who is receiving foreclosure notices and why.
A few years ago, more people receiving foreclosure notices were in some sort of financial crisis and laboring under a mortgage “that should never have been made,” Helmick said, either because the home’s value was not high enough to justify the loan, the homebuyer didn’t have enough income to make payments, or perhaps both.
“That group of homes has been processed through (the system),” Helmick said.
Now, Helmick said, about half the foreclosures he sees involve homeowners who have moved away to take other jobs, can’t sell their Lane County home for enough to pay the mortgage or do a short sale, with the mortgage lender agreeing to accept less than the amount owed on the house. So they abandon the home, leaving the lender to foreclose.
“Based on what they’re earning, they can make the payments, but they’re not willing to make payments on a house in Eugene when they’re living in Boise,” he said. “The No. 1 driver of foreclosures is jobs,” Helmick said, “(and) that can be unemployment, underemployment or job changes.”
And foreclosures due to unemployment are becoming less common, he said.
Helmick said that, while it is traumatic for anyone who has lost their home because of foreclosure, it’s important to remember that, from the standpoint of the real estate market, only about half of 1 percent of all Lane County households were affected by foreclosures last year.
While anything that affects supply has an impact on the market, he said, he doesn’t see foreclosures putting a drag on a recovery in the local real estate market.
Gorilla Capital is “on the buy side and on the sell side,” he said, “and we do see that housing prices are moving in a positive direction. It’s not a large increase, it’s not a steep increase, but we see a general upward trend.”
“Everything affects house prices — interest rates, employment, housing inventory, whether people are moving into or out of Lane County,” he said.
“I’ve been sitting behind this desk for seven years,” he said. “I’m more confident in the Lane County housing market this January than I have been for any of the past five Januaries. The Lane County housing market is healing, it’s healing on its own.
“It’s not a fast process, it takes time. And it’s all about the jobs. If we want the housing market to recover, we need to have more jobs in Lane County.”
Copyright © 2013 — The Register-Guard, Eugene, Oregon, USA