Please do not leave this page until complete. This can take a few moments.
Foreclosures are placing a heavy burden on Central Massachusetts, and it appears it could be several years before that load becomes lighter.
Foreclosure activity started to pick up again in July, according to the latest numbers from the Warren Group, and housing analysts predict the trend will continue for the remainder of 2011 as lenders begin to work through a backlog of properties whose owners are behind on their mortgage payments.
Currently, Worcester County contains more communities with high rates of homes either owned by banks or in foreclosure (also known as "distressed" homes) than any other Bay State county, according to an analysis by the Massachusetts Housing Partnership. Winchendon, North Brookfield, Athol, Fitchburg, Ashburnham, Worcester, Warren, Hardwick and Leicester all made the list of the top 20 most distressed communities in the state.
Distress is measured by comparing the number of distressed properties to the total number of housing units in a community.
The Massachusetts Picture
Foreclosure petitions numbered 1,441 in July, the highest monthly total in nearly a year, according to Warren Group data.
Activity was down 38 percent from the same time last year, but that year-over-year margin could narrow in the final months of 2011, analysts say.
Cory S. Hopkins, managing editor of Banker & Tradesman, which is published by the Warren Group, predicted in a podcast accompanying the latest numbers that foreclosure activity would pick up in the final five months of 2011.
The Bay State's housing market reached a tipping point last year, when the majority of distressed properties shifted from urban areas to suburban and rural areas, said Clark Ziegler, executive director of the housing partnership.
Ziegler said earlier foreclosures, from around 2005 to 2007, were mostly the result of subprime lending practices, which have worked their way through the system.
"What's the big driver now is not bad loan products or lenders or lending practices," Ziegler said. In many cases, it's "people with conventional mortgages who are underwater, where they may have either a job loss or reduced hours."
Ziegler said communities feel the impact through reductions in property values and difficulty collecting property taxes. Foreclosures can also deter commercial investments in an area or make it harder for people to sell their homes.
"It has a ripple effect," he said.
Working Through Backlog
The increase in foreclosure petitions that the Warren Group and others have predicted does not mean more homeowners are getting into trouble, said Tim Davis, an analyst for the partnership's Foreclosure Monitor online publication.
"There are families who have been in trouble and not really pushed through the pipeline," Davis said. "It's more that this is a backlog than it is new families."
Davis expects it will take two or three years for lenders to work through the bulk of the existing backlog.
Rick Healey, president of Foster-Healey Real Estate in Leominster, agreed that foreclosures have affected sale prices in North Central Massachusetts, where a number of communities are faced with high distress rates.
"Does it have an impact on the market and will it continue to have an impact on the market? Yes it will, in terms of keeping prices from appreciating," Healey said.
Healey has noted an increasing willingness of lenders to facilitate short sales, where a borrower sells his home for less than what he owes on it. Those may not be ideal, but they lead to higher average appraisals because the homeowner tends to keep up the property better, Healey said.
The silver lining for real estate agents, he said, is that people who are employed have been taking advantage of lower prices and interest rates as low as three to four percent.
"That's almost free money," he said. "Granted, it's harder to get, but we are selling properties."
Stay connected! Every business day, WBJ Daily Report will be delivered to your inbox by noon. It provides a daily update of the area’s most important business news.
Sign upWorcester Business Journal provides the top coverage of news, trends, data, politics and personalities of the Central Mass business community. Get the news and information you need from the award-winning writers at WBJ. Don’t miss out - subscribe today.
SubscribeWorcester Business Journal presents a special commemorative edition celebrating the 300th anniversary of the city of Worcester. This landmark publication covers the city and region’s rich history of growth and innovation.
See Digital EditionStay connected! Every business day, WBJ Daily Report will be delivered to your inbox by noon. It provides a daily update of the area’s most important business news.
Worcester Business Journal provides the top coverage of news, trends, data, politics and personalities of the Central Mass business community. Get the news and information you need from the award-winning writers at WBJ. Don’t miss out - subscribe today.
Worcester Business Journal presents a special commemorative edition celebrating the 300th anniversary of the city of Worcester. This landmark publication covers the city and region’s rich history of growth and innovation.
In order to use this feature, we need some information from you. You can also login or register for a free account.
By clicking submit you are agreeing to our cookie usage and Privacy Policy
Already have an account? Login
Already have an account? Login
Want to create an account? Register
In order to use this feature, we need some information from you. You can also login or register for a free account.
By clicking submit you are agreeing to our cookie usage and Privacy Policy
Already have an account? Login
Already have an account? Login
Want to create an account? Register
This website uses cookies to ensure you get the best experience on our website. Our privacy policy
To ensure the best experience on our website, articles cannot be read without allowing cookies. Please allow cookies to continue reading. Our privacy policy
0 Comments