Mortgage foreclosure filings in state retreat
Mortgage foreclosures, the dreaded scourge of the residential real estate market during the Great Recession and its aftermath, appear to have retreated to their lowest levels since the 1990s in Wisconsin.
After peaking at 28,500 in 2009, foreclosure filings in 2016 totaled roughly a fourth of that amount, said Russell Kashian, a University of Wisconsin-Whitewater economics professor who tracks foreclosures in the state.
Kashian said he won’t have the final tally for a week or so, but 2016’s foreclosure filing numbers look like they will come in lower than in any year since the new century began.
While cautioning that there might be some pockets of foreclosure trouble in the state, overall, Kashian said, “It’s not really a problem anymore.”
In the Milwaukee metro housing market, where foreclosed or distressed properties accounted for as much as 40% of sales from 2010 to 2012, they now amount to only in the low single digits as a percent of overall sales.
“It’s not even on anyone’s ra-
dar any longer,” said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors.
While the improving economy and job growth are key factors, another element of the reduced foreclosure filings is simply a matter of the strong surviving, Kashian said. Generally, he said, if borrowers didn’t lose their house during that tenacious downturn, they aren’t going to lose it at all and are “probably out of the woods.”
New rules governing home lending also have made it tougher for some borrowers to qualify for mortgages. The new regulations were established in part as a reaction to the relatively loose loan lending standards that led up to the foreclosure crisis and economic downturn.
“You had creative financing matched up with people who traditionally weren’t buying homes,” Kashian said of the climate leading to the foreclosure crisis. “You brought people into the marketplace who weren’t necessarily ready at that point to be in the marketplace. And you had buyers of bonds who were thrilled to invest in American real estate financing.”
In the seven-county southeast Wisconsin region, foreclosure filings in 2016 hit their lowest level in at least the last 11 years. The Milwaukee Journal Sentinel’s county-by-county records on foreclosure filings go back to 2006.
Last year’s total of 3,974 mortgage foreclosure filings in Kenosha, Milwaukee, Ozaukee, Racine, Walworth, Washington and Waukesha counties was less than a third of the amount in the worst years of the crisis, 2009 and 2010. It also was down almost 22% from 5,073 filings in 2015, court records for the counties show.
In December, Milwaukee County posted its lowest single-month foreclosure filing total in the 11 years for which the Journal Sentinel has records, at 271. During the peak of the foreclosure crisis in 2010, Milwaukee County averaged more than 600 filings per month.
While foreclosures have diminished, a hangover from the crisis period still exists in the city of Milwaukee, which has about 1,000 tax-foreclosed homes. City officials have become increasingly aggressive about selling tax-foreclosed properties and offering programs to help people rehab them.
Recently, for example, the city announced it is seeking developers interested in buying and rehabilitating foreclosed houses in the Sherman Park neighborhood. The $1 million program will subsidize the renovation of 100 tax-foreclosed homes. Those homes will be sold for $1 each to developers, who will then be eligible for grants of up to $10,000 per home.
In the broader Milwaukee metro area, the housing market concern over the last couple of years has been a tight inventory of homes for sale, real estate professionals say.
Construction of new houses in Milwaukee, Ozaukee, Washington and Waukesha counties was up in 2016, but at a slower pace than in the early and mid-2000s when the housing bubble was building.
Kashian said that’s OK with him.
“There is nothing wrong with being prudent,” he said. “I am happy I’m not seeing spec homes pop up all over the place. I think we’re building out as needed.”