By Natalie Sherman and Scott Dance, The Baltimore Sun
11:04 PM EDT, April 10, 2014
Even as the housing market recovers nationwide, echoes of the mortgage lending crisis continue to reverberate in Maryland, home to the nation's second-highest foreclosure rate last month.
One in every 527 housing units in the state was touched by a foreclosure filing in March, the 21st consecutive month of year-over-year gains and the second highest rate in the country behind Florida, according to a monthly report by RealtyTrac, a California real estate firm.
Meanwhile, median home prices in the Baltimore region remained flat, and distressed properties continued to make up an elevated share of sales, according to new reports on the regional housing market released Thursday.
Maryland's foreclosure activity runs counter to trends in the nation, which has seen 42 consecutive months of year-over-year declines, according to RealtyTrac. Nationwide, an average of 1,121 properties per housing unit have been touched by foreclosure filings.
"That definitely stands out," said RealtyTrac Vice President Daren Blomquist, adding that he expects the activity to decline again in about six months. "It's one of a handful of states where the trend is in the opposite direction."
There were 2,634 new foreclosure starts in Maryland last month, up 28 percent compared to the year before and 19 percent compared to February, according to RealtyTrac.
Officials with the state's Department of Housing and Community Development said they expect elevated foreclosure activity to persist, but decline throughout 2014. They attributed the state's high levels of foreclosure activity to a backlog of delinquent loans.
Many lenders in the state suspended foreclosures at the peak of the housing crisis as the state imposed legal changes that lengthened the process. Settlements over "robo-signing" and other housing crisis problems also delayed many foreclosures. Some homeowners received assistance that helped them avoid foreclosure in recent years, but now may be left with few options if they remain behind on payments.
"In Maryland, we have been able to prevent avoidable foreclosures very well compared to other areas," said Ruth Griffin, executive director of the Maryland Housing Counselors Network. "Some foreclosures that were not avoidable were delayed, and those are what we're seeing now."
But data now show the foreclosure process in Maryland may be speeding up. In the first three months of this year, it took an average of 473 days for a property to go through foreclosure in Maryland, compared to 575 last year, the RealtyTrac report said.
Real estate analysts said it's not clear yet how the addition of more foreclosed properties will affect the housing market, which has experienced months of slow and steady growth.
Sales in Baltimore and the five surrounding counties grew 4.6 percent last month to 2,048 compared to 1,957 in March 2013, according RealEstate Business Intelligence, a subsidiary of the MRIS multiple listing service. Sales rose by about a third compared to February, in line with the historical seasonal pickup in activity, RBI found.
That could encourage more lenders to pursue foreclosures.
"It's starting to make more sense from a business standpoint for the banks to foreclose on someone who is severely behind," said Roy Miller, a housing counselor with Belair-Edison Neighborhoods, a community nonprofit in Northeast Baltimore. "They're not taking as much of a loss with the market starting to rebound."
Foreclosed properties as a share of new listings in the Baltimore region have posted year-over-year gains every month since May 2013, according to MRIS. In March, foreclosures represented 430 of the roughly 4,500 homes that came on the market, double the number from last year, MRIS found.
Distressed properties overall, including short sales and foreclosures, represented about 23 percent of the roughly 2,000 deals that closed in March and 26 percent of the new contracts, MRIS found. That's a large share, but it's not the highest it's been. The levels are similar to the last two years.
"This recent uptick in foreclosures notwithstanding, the Baltimore metro market is consistently seeing moderate price gains, which is good," said Corey Hart, senior product manager for RealEstate Business Intelligence. "It's something to keep an eye on … but we're still not at the point where it's enough of the share of sales to have an impact in terms of the regional trends."
The region's median sales price in March was $227,500, about the same as February and March of last year, according to RealEstate Business Intelligence. That remains down about 15 percent from the March 2007 peak of $269,000.
Properties in Howard County posted the strongest gains, with a median price of $400,000, up almost 14 percent compared to last year. Harford County was the only county in the region where prices dropped yearover year, down 12.9 percent to $210,000.
In Anne Arundel County, the median price rose 2.8 percent, to $298,000; in Baltimore County, it rose 2.6 percent to $200,000; and in Carroll County it rose 1.9 percent to $265,000.
In Baltimore City, the median home price was flat at $115,150.
Agents and economists said March's unusually harsh weather dampened last month's activity, but the Baltimore region fared better than other markets, such as Washington. Many are predicting that pent-up demand will drive a busy spring season.
"We would have had a better March if we had more traditional weather," said Alyssia Essig, sales manager for the Prudential/PenFed Realty office in Roland Park. "I think you're going to see an explosive spring."
The number of active listings last month increased almost 11 percent year over year to 10,659, but inventory remains low. RealtyTrac's Blomquist said the combination of low inventory and buyer demand may help prices rise, despite the large share of distressed homes.
"There's enough demand in the market that it's not causing home prices to decrease, even with the additional foreclosure activity," Blomquist said.
Ross Mackesey, sales manager of Long & Foster Real Estate's Greenspring office in Lutherville, predicted that prices will rise this spring.
"I think that we're probably looking at keeping pace with inflation and I think that's good," Mackesey said. "If we can continue to do that while we are working through the distressed property inventory, I think we've done well."
How Md. stacks up
Top states by foreclosure rates in March
1. Florida with 1 foreclosure filing for every 407 housing units
2. Maryland with 1 in every 527
3. Indiana with 1 in every 656
4. Ohio with 1 in every 663
5. Illinois with 1 in every 682
Delaware with 1 in every 820
Pennsylvania with 1 in every 1,113
Virginia with 1 in every 2,102
Washington, DC with 1 in every 29,667
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