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Posted: January 20, 2011 6:33 p.m.

Foreclosures still abundant in county

Unemployment, falling home values could lead to more foreclosures in 2011

Brittany Thomas/

Joseph Flanigan’s house is worth $52,000, less than a third of its peak appraisal in 2007.

Three years ago, a builder constructed a house in Social Circle and listed it for $602,000. He eventually lost it to foreclosure and it sold for $250,000 at an auction. "That hurts everyone in this area when it comes up in the comps," said next-door neighbor Kathlene Miller on Facebook.

And there’s also Michelle Autry, who is in danger of losing her home after being behind on mortgage payments by about two years. She owes more than $120,000, but in a short sale, her house would likely only go for $40,000 to $60,000.

Autry has lived in her home on Livingston Lane for about eight years. She’d prefer to stay there, but she realizes that’s unlikely. She and her husband had managed to get Bank of America to agree to a refinance plan, but when they saw that payments would eventually balloon to $900 a month, they realized that would only delay the inevitable.

They’re still waiting to see if a new agreement can be reached, but Autry, who is unemployed and unable to find work, is preparing for the possibility of downsizing to an apartment or even moving back in with her parents.

Autry is one of a growing number of local residents, and homeowners across the country, caught in the crunch between chronic unemployment and tumbling home prices.

If her house goes through a short sale, it will only contribute to the county’s declining home sales prices. On average, homes in Newton County sold for 17 percent less in 2010 compared to 2009, according to the Multiple Listing Service, which contains the majority of properties on the market in Newton County. The average sales price this year, for both foreclosures and regular sales, was $90,617.

"Even if it’s not a foreclosure, sellers have to price their house like a foreclosure to sell. People are looking at prices," said RE/MAX broker Marshall Ginn. "I think we’ll at least see as many foreclosures as last year…95 percent of what I sell is foreclosed property. That’s pretty much been the way it’s been for the past three to four years."

The Lost Decade

The recession has cut so many jobs and so much value from American homes since it first struck in December 2007, it’s wiped out all the growth since 2000.

Average home values in Metro Atlanta continue to decline, dropping by nearly 3 percent in October, according to S&P/Case-Shiller Home Index, which uses repeat sales data to compare historical home prices.

Atlanta’s average home price has dropped by 6.2 percent in the past year, continuing a precipitous drop that leaves the average just above where it stood in October 2000.

The S&P index is predicting prices will drop by an additional 7 to 10 percent in 2011, bottoming out in the spring.

In addition, the United States’ economy has lost 7.24 million jobs since its peak in December 2007, according to data from federal Bureau of Labor Statistics. Based on data for December 2010, the economy employs 69,000 fewer workers than it did in January 2000.

Though Newton County suffers from an unemployment rate higher than 12 percent, the local economy still managed to net 10,000 jobs from January 2000 to November 2010.

Investors and economic forecasters predict the economy will add 2.5 million jobs in 2011, but because of population growth, the U.S. unemployment rate is expected to drop only slightly, to about 9 percent. Because the official unemployment rate does not include those who have stopped working and those working temporary or part-time jobs who would prefer full-time work, the true unemployment rate could be closer to 18 percent, according to economists.

The Year of Foreclosures

RealtyTrac, an online foreclosure marketplace, predicts that 1.2 million homes could be repossessed in 2011, marking the highest total since the housing market collapsed.

About 5 million U.S. borrowers are at least two months behind on their mortgages, according to a Jan. 13 story by the Associated Press, and industry experts expect more people to miss payments because of job losses and strategic defaults, where borrowers stop paying on a home that’s worth far less than what they owe.

Although the worst of the subprime crisis has passed, long-term unemployment is continuing to drag more and more prime borrowers into foreclosure, as they have tapped out savings accounts and investment portfolios. Historically, prime borrowers could take out a second mortgage using the equity in their home, but that’s not happening in 2011.

 

Wrapping up 2010

Although the final foreclosure and sales numbers for 2010 are not available, Newton County appears to be on track to match 2009 numbers.

A total of 1,745 foreclosures have occurred in Newton County in 2010 through November, compared to 1,889 in all of 2009. About one third of foreclosures are vacant lots, according to data from the Newton County Tax Assessor’s office.

More than 70 percent of all foreclosures were sold back into the market both years.

"The biggest difference I see is in home foreclosures from houses built from 2000 to current. That number increased 15 percent from 2009 to 2010. That tells us almost seven of every 10 homes in foreclosure are only 10 years or newer in age. It also tells us older homes in well established neighborhoods are not losing value as much as these newer homes," said Chief Tax Appraiser Tommy Knight in an e-mail.

Knight said that different neighborhoods in the county have been affected very differently. He said it’s quite possible that some areas will continue to see values drop more than 5 percent, while others will remain stable. The majority of foreclosures have continued to be in the western part of the county. His office determines values using only appropriate neighborhood comps.

The county has about 29,000 total homes, putting the foreclosure rate on homes, not including vacant lots, at about 4 percent. Foreclosure re-sales represent 81 percent of all residential sales in Newton County; while there have been about 300 regular sales through November 2010.

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