Foreclosure activity declined during the first quarter this year, as economic improvements made it possible for a greater number of homeowners to make their monthly mortgage payments and avoid default.
Real estate data from RealtyTrac shows that there were 572,928 properties foreclosed on during the three-month period. This is a 2 percent decrease from the previous quarter and a notable 16 percent drop from a year earlier. However, despite the improvements, analysts say the housing market isn't out of the woods just yet.
"The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated," said RealtyTrac CEO Brandon Moore. "There are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and non-judicial states in March."
Additionally, Moore noted that the buildup of foreclosed houses may not have an immediate effect on the market, but current homeowners should be aware that there could be an upswing in activity among new foreclosure activity and short sales in the future that could put even more downward pressure on property values.
Regionally, the report indicated that the bulk of foreclosure activity occurred in states that use a judicial foreclosure process. It was found that these 26 states accounted for an estimated 243,074 of the properties that received a foreclosure filing by the end of March. This is a notable increase of 8 percent from the previous three-month period and a 10 percent surge from the first quarter of 2011.
Meanwhile, in non-judicial foreclosure states, there was a annual decrease in activity. This was led by Arkansas, where there was a 79 percent dip in foreclosures, followed by Nevada, which improved dramatically after a 62 percent drop.
However, even though Nevada saw a significant decline in activity, it still had the highest foreclosure rate in the country, as one in every 95 properties in the state was in some stage of the foreclosure process during the first three months of 2012.
Even though Nevada still maintained a high level of foreclosure activity, the $25 billion settlement reached between the nation's largest mortgage lenders and a number of state attorneys general on behalf of homeowners wrongfully foreclosed on was recently approved by a federal judge. As a result, a number of these distressed households could soon receive financial relief.