January 23, 2014

Foreclosures drop in SC

But state’s national ranking rises due to lag time in courts

South Carolina rose to eighth in the country in foreclosures in 2013, from ninth in 2012.

The rise comes despite foreclosures statewide dropping nearly 20 percent from 2012, according to an end-of-the-year report from RealtyTrac, a national real estate reporting service.

RealtyTrac vice president Daren Blomquist attributed the rise in national standings to South Carolina being a “judicial state,” meaning that the foreclosure process has to wind its way through the courts rather than being handled administratively.

“That tends to be a lengthier process, so those judicial states are lagging other state’s getting through the foreclosure process,” he said.

But Blomquist added that South Carolina is doing well compared to some other judicial states such as Maryland, where foreclosure activity was up 117 percent last year. South Carolina is faring better because of the high number of retirement homes along the coast that are being sold more quickly now that the economy is improving, he said.

Nationally, foreclosures dropped 26 percent, the report showed.

“It’s the lowest since 2007,” Blomquist said. “We’re not quite back to pre-recession levels, but we’re almost there nationally.”

The declining foreclosure rate is another sign that the recovery from the worst recession since the Great Depression is solidifying, said University of South Carolina economist Joseph Von Nessen.

“This is what we expect a real real estate recovery to look like,” he said. “We’re seeing more economic activity, lower unemployment, more economic stability and more disposable income. So people feel more comfortable buying a home.

In South Carolina, Richland County ranks fifth in the state in foreclosures per percentage of homes. It had 2,760 foreclosures last year out of 159,980 total housing units, a drop of about 17 percent from 2012.

Lexington County ranks seventh in the state, in foreclosure per percentage of homes. Foreclosures dropped 23 percent since 2012, with 1,827 foreclosures out of 112,422 housing units countywide.

One concern, Blomquist said, is that in December, 51 percent of distressed homes in South Carolina were sold for cash. That likely means investors are snapping up properties at discounted rates.

“That may be locking out bread and butter home buyers,” he said.

RealtyTrac’s statistics rank the Dorchester and Berkeley counties in suburban Charleston first and second, respectively, in foreclosures. Rural Marlboro County had the fewest foreclosures in 2013.

The drop in foreclosures in the Columbia area comes with other positive indicators in the real estate market:

•  Year-to-year home sales rose 22 percent to 9,295 in 2013 from 2012, continuing a two-year trend.
•  The median price of homes that sold in the Midlands last year rose 3.1 percent from 2012 to $145,000.
•  And the average time homes took to sell last year dropped to just over three months from more than six and a half months the previous year.

“The numbers that are supposed to go up are going up and the numbers that are supposed to be coming down are coming down,” said Karen Yip of Yip Premier Real Estate. “Those are indicators of an improving market, albeit slow.”

Yip called the fourth quarter of 2014 “exciting” and said she had 15 closings.

“That’s atypical because November and December tend to be slower,” she said.

She attributed the higher-than-normal sales to buyers’ confidence that the economy is improving, more people getting back to work and concern over rising interest rates.

Average interest rates dipped below 4 percent in November 2011 and did not rise above that mark again until June of last year, according to Freddie Mac. Rates have climbed fairly steadily since then.

“The days of the 3.5 percent interest rates are pretty much gone,” Yip said. “The average 30-year fixed is 4.6 percent to 4.7 percent and I would not be surprised if we inched up to 5 percent soon.”

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