Despite drop, Stockton still leads nation in foreclosure rate
January 31, 2013
• But it’s among the worst places for investors to snap up foreclosures
• “The underlying fundamentals … are slowly improving”
Despite double-digit percentage decreases in foreclosure activity compared to 2011, California cities accounted for the top four metro foreclosure rates in the nation, led by Stockton with 3.98 percent of housing units (one in 25) with a foreclosure filing last year -- nearly three times the national average, according to a report from RealtyTrac Inc. of Irvine.
Other California cities with foreclosure rates among the 20 highest in 2012 were Riverside-San Bernardino-Ontario at No. 2 (3.86 percent of housing units with a foreclosure filing); Modesto at No. 3 (3.82 percent); Vallejo-Fairfield at No. 4 (3.73 percent); Merced at No. 11 (3.23 percent); Bakersfield at No. 15 (3.11 percent), and Sacramento at No. 20 (2.94 percent).
All seven California cities in the top 20 documented declining foreclosure activity compared to 2011. Florida cities account for eight of top 20 metro foreclosure rates.
The report shows 2012 foreclosure activity increased from 2011 in 120 (57 percent) out of the nation's 212 metropolitan statistical areas with a population of 200,000 or more. Foreclosure activity during the year decreased from 2010 -- when foreclosures peaked in most markets -- in 181 out of the 212 markets tracked in the report (85 percent).
"Markets with increasing foreclosure activity in 2012 took the first step in finally purging delayed distress left over from the bursting housing bubble," says Daren Blomquist, vice president at RealtyTrac. "Meanwhile, the underlying fundamentals in many of those markets are slowly improving, making it an opportune time to absorb additional foreclosure inventory this year -- and that is particularly good news for buyers and investors hungry for more inventory to purchase in those markets."
Despite their foreclosure rates, Central Valley cities are rated as among the worst in the U.S. for investors to buy foreclosed properties by RealtyTrac.
To select the best places to buy foreclosures in 2013, RealtyTrac scored all metro areas with a population of 500,000 or more by summing up four numbers: months' supply of foreclosure inventory, percentage of foreclosure sales, foreclosure discount, and percentage increase in foreclosure activity in 2012.
Using its formula, the company says the Palm Bay-Melbourne-Titusville metro area in Florida with a total score of 394 is the best place to buy. RealtyTrac shows the metro with a 34 months' supply of inventory, foreclosure sales representing 24 percent of all sales, average foreclosure discount of 28 percent, and a 308 percent increase in foreclosure activity in 2012 compared to 2011.
The metro with the lowest score was McAllen, Texas, with a 12-month supply of foreclosure inventory, foreclosure sales accounting for 7 percent of all sales, an average foreclosure discount of 21 percent, and a 66 percent decrease in foreclosure activity in 2012 compared to 2011.
Stockton, which was on top of the one list, is also on the worst-buy list with a mere eight months supply of foreclosed homes. Sacramento, Fresno, Modesto and Bakersfield also make the list of worst places for investors to snap up foreclosed homes, says RealtyTrac.
Metros with the lowest scores were dominated by cities in the west,