A new report just released by ATTOM Data revealed that nearly one of every four homeowners (24.3 %) in the city of St Louis that have a mortgage, are underwater on equity (meaning property owner owes at least 25% more on their home than the current value). At the other end of the spectrum was St Charles County where just 3.9% of homeowners with a mortgage are underwater.
Below is a list of the larger counties in the St Louis MSA and the percentage of the mortgages in the respective county that was underwater during the 4th quarter of 2022:
Last month, there were 307 properties with foreclosure filings in the St Louis MSA, according to ATTOM Data’s U.S. Foreclosure Market Report. This represents an increase of 25% in St Louis foreclosures from January 2022 to January 2023.
It’s not as bad as it sounds…
While a 25% increase sounds bad, the chart below, which shows foreclosure filings for the St Louis MSA since 2006, puts it in perspective. Last year, there were 4,066 total foreclosure actions for the year so even if our foreclosure activity for 2023 would continue to be 25% higher than last years level, it would put us at a little over 5,000 foreclosures for 2023. As the chart below illustrates, if we finished 2023 at that level we would still be on the low end of the spectrum during the past 17 years.
During 2022, there were 4,066 properties with foreclosure filings in the St Louis MSA, according to ATTOM Data’s U.S. Foreclosure Market Report. This represents an increase of 46% in St Louis foreclosures from 2021 and a 48% increase from 2020.
It’s not as bad as it sounds…
While the 2022 increase sounds bad, the chart below, which shows foreclosure filings for the St Louis MSA since 2006, puts it in perspective. The foreclosure activity in St Louis last year, while higher than the two prior years mentioned above, was lower than the 14 years prior. As the chart illustrates, as recently as 4 years ago, there was over 50% more foreclosure activity in St Louis than in 2022 and 5 years ago, in 2017 it was nearly double.
Having said that, we will likely see the foreclosure activity continue to increase and I am confident that the St Louis foreclosure activity in 2023 will surpass 2022, but hopefully we won’t get to the levels we’ve hit in the recent past.
During November, there were 255 properties with foreclosure filings in the St Louis MSA, according to ATTOM Data’s U.S. Foreclosure Market Report. This represents an increase of 42% in St Louis foreclosures from November of 2021 but is a decline of over 76% from the prior month, according to the report.
As the chart below shows, 8 counties reported an increase in foreclosures from a year ago, 2 counties had a decrease in foreclosure activity and 5 had no change in activity. Macoupin County, Illinois saw the largest increase at 367% followed by Warren County, Missouri at 300%.
St Louis MSA Foreclosure Activity – November 2022 vs November 2021
Data source: ATTOM Data Research – Copyright 2022 St Louis Real Estate News
During the third quarter of this year, there were 907 properties with foreclosure filings in the St Louis MSA, according to ATTOM Data’s U.S. Foreclosure Market Report. This represents an increase of 44.43% in St Louis foreclosures from the same quarter a year ago but is a decline of 16% from the second quarter of this year, according to the report.
As the table below shows, with the exception of Bond County in Illinois, all 15 counties reported had an increase in foreclosure activity during the 3rd quarter over last year, and all at least a double-digit increase. Lincoln County, Missouri saw the largest increase at 325% followed by Macoupin County, Illinois at 293%. Only five of the 15 counties saw an increase in foreclosure activity from the prior quarter.
Given the inflation numbers announced yesterday, rising interest rates and the rest of the economic challenges that exist we are likely to see a continued increase in foreclosure activity for the foreseeable future.
St Louis MSA Foreclosure Activity – 3rd Quarter 2022
Data source: ATTOM Data Research – Copyright 2022 St Louis Real Estate News
There were 94,766 homes and condominiums “flipped” during the third quarter in the U.S., according to data just released by ATTOM Data Solutions. These flips represent 5.7% of all homes sales during the 3rd quarter of 2021, an increase of nearly 12% from the prior quarter when 5.1% of all homes sold were flips.
Gross profit margins dip to the lowest point since early 2011…
According to the report, the gross profit margin (the difference between the price paid for the flipped house when purchased versus the price paid by the new buyer when flipped) was $68,847. This represents a 32.3% gross margin, the lowest gross margin percentage since the first quarter of 2011.
Last month, there were foreclosure filings on 19,479 properties in the U.S., according to ATTOM Data’s U.S. Foreclosure Market Report. This represents a decline of 5% from the month before but a 94% increase from a year ago, according to the report.
Let’s put it in perspective…
Data and statistics are funny things. Even when accurately presented they can paint a picture that may sound worse, or better than the real situation behind the data. This is why I consistently suggest that people don’t base opinions of the market, or make decisions, on one piece of data. It takes many pieces of data to really paint the whole picture, just like in this case. The headline that was reported by ATTOM Data (and repeatedly in many publications) is accurate, foreclosures are up 94% from a year ago. But if there are currently 19,479 properties with a foreclosure filing, that means there were just 10,040 filings a year ago. Granted, its bad to have anyone lose their home, but, historically speaking, these foreclosure numbers are low..very low. For example, in April 2010, a couple of years after the housing bubble burst, there were 367,056 foreclosure filings that month. So, last months number of 19,479 is 94% lower than April 2010.
Again, I’m not minimizing the significance of a foreclosure or the effect it has on those affected by it, I’m just trying to paint a more clear picture to show at this time, even though we’ve seen an increase, the numbers are still pretty low.
There were a total of 550 home sales in the St Louis 5-County core market during the 12-month period ended August 31, 2021, a decline of over 90 percent (90.5%) from the same period 10 years earlier. As the chart below (available exclusively from MORE, REALTORS®) illustrates, the St Louis distressed home sales 12-month trend peaked in May 2013 with 6,078 distressed home sales in the prior 12-month period and has fallen to just 550 distressed home sales for the 12-month period ended August 31, 2021. For the purposes of this report, distressed home sales include the sale of homes previously foreclosed on and being sold by banks or a government entity (such as FHA/VA) and short sales. Given that there has been a foreclosure moratorium in place for several months during the past year it’s not surprising the current trend is down but as the chart shows, the trend has been steadily downward since late 2013.
St Louis 5-County Distressed Home Sales – 01/01/2011 – 8/31/2021
The Consumer Financial Protection Bureau (CFPB) earlier this week proposed rule changes that would help prevent “avoidable foreclosures” that will come about when the current foreclosure ban expires June 30th. According to the CFPB, nearly 3 million homeowners are delinquent on their mortgages as a result of the COVID-19 pandemic as well as the economic issues that have come about as a result.
The CFPB’s proposed rule changes include:
Require a pre-foreclosure review period that would generally prohibit loan servicers from starting foreclosure until after December 31, 2021 on loans secured by a borrower’s principal residence.
Permit loan servicers to offer “certain streamlined loan modification options to borrowers with COVID-19-related hardships.”
The CFPB is going to accept comments on their proposed rules until May 11, 2011 and then afterward will decide how to proceed.
About the CFPB (from their website)
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visitwww.consumerfinance.gov.
I have a lot of people ask me about what to invest in and how.Not every time, but often, the self-directed IRA investments can be great options for people that are in the real estate industry.For this post, I wanted to go over the basic concept and give some actual real-life examples.Once you read this, if you still need help or have questions, you are more than welcome to reach out.We are here to serve and help!
What is an IRA and what does a “self-directed” IRA mean?This is an Individual Retirement Account.There are two options:
Roth IRA – contributions are post-tax and then the growth is tax-free for life
Traditional IRA – contributions are pre-tax and then the growth deferred
During the 2020 year, you can contribute $6k a year and add $1k if you are over 50. There are income limits for contributions for the Roth IRA and the tax-deductible traditional.However, you can always contribute to the traditional but the income limit determines if the IRA is tax-deductible or not.All traditional IRA’s are tax-deferred.The Roth IRA is the only tax-free growth IRA.
As I reported a couple of days ago, home sales (non-distressed) in St Louis were up around 8% in 2020 verses 2019 however, distressed home sales were down 25% in 2020 from the year before. For several months of 2020, there were moratoriums on foreclosures which would lower the number of distressed sales and are no doubt largely responsible for the decline in sales. For the sake of this report, “distressed” sales include foreclosures, short sales, and property owned by banks or the government.
During 2020, there were 894 sales of distressed homes, down 25% from 2019 when there were 1,191 sales. The median price of distressed homes sold during 2020 was $71,788 an increase of nearly 14% from 2019 when the median price was $63,000. There are currently 54 active listings of distressed homes representing a one-month supply.
STL Market Report – St Louis 5-County Core Market
(Distressed home sales only- click report for live report)
Zombies are on the rise in St Louis! I’m referring, of course, to Zombie foreclosures and not the spooky creatures from scary movies. A zombie foreclosure is a property that is in “pre-foreclosure” meaning it is in the foreclosure process but has not been yet foreclosed upon and is vacant or abandoned by the current owner. We saw the levels of zombie foreclosures rise significantly after the housing bubble burst back in 2008 but then fall around 2012 as the market began its recovery. For the 3rd quarter of 2020, according to ATTOM Data Research, 10.8% of the homes in pre-foreclosure were vacant or otherwise known as “zombies foreclosures”. This is a fairly significant increase in the zombie rate from the prior quarter when 7.79% of the pre-foreclosures were vacant. A year ago, during the 3rd quarter of 2010, the zombie foreclosure rate was 7.77%.
St Louis vacant property rate rises during 3rd quarter as well..
As the table below also illustrates, 2.95% of the more than 1,000,000 residential properties in the St Louis MSA were vacant during the 3rd quarter of 2020 which is an increase from 2.88% for the 2nd quarter of 2020 as well as an increase from a year ago when the vacancy rate was 2.86%.
St Louis Area Vacant Homes and Zombie Foreclosures
There were 542 homes “flipped” in the St Louis metro area during the first quarter of 2020, or 8.5% of the total number of homes sold in the St Louis metro area during the quarter, according to data just released by ATTOM Data Solutions. This is an increase of 13.8% from the prior quarter and is a decrease of 2% from a year ago. The median gross profit was 52,900 a 60.8% gross ROI.
Definition of a “flipped” home…
For the purposes of this report, a flipped home is considered to be any home or condo that was sold during the first quarter of this year in an arms-length sale that had previously had an arms-length sale within the prior 12 months. Since homeowners don’t tend to buy a home only to turn around and resell it within a year, when this does occur it is typically the result of an investor buying a property, renovating it, then reselling it.
The foreclosure rate for the St Louis MSA during February increased 22.55 percent from the prior month but declined 12.0% from February 2019, according to data just released from ATTOM Data Solutions. As the table below shows, only 3 counties in the St Louis metro area saw a decline in foreclosure activity in February from the month before but 10 of the 15 counties reported saw a decline in foreclosure activity from a year ago.
Three counties, Madison in Illinois and St Louis and Lincoln in Missouri, saw a decline in foreclosure activity from both the month before as well as the year before.
In response to the coronavirus pandemic, the U.S. Dept. of Housing and Urban Development (HUD), as well as the Federal Housing Finance Agency (FHFA) (which oversees Fannie Mae and Freddie Mac), directed their loan servicers to suspect foreclosures and evictions for at least 60 days to help those people affected.
In a statement, Mark Calabria, the Director of the FHFA, said that borrowers affected by the coronavirus who are having difficulty paying their mortgages should reach out to the mortgage servicers as soon as possible.
HUD Secretary Ben Carson said that “The halting of all foreclosure actions and evictions for the next 60 days will provide homeowners with some peace of mind during these trying times,”
There were 737 homes “flipped” in the St Louis metro area during the fourth quarter of 2019, or 7.2% of the total number of homes sold in the St Louis metro area during the quarter, according to data just released by ATTOM Data Solutions. This is an increase of 9% from the prior quarter and is a decrease of 6% from a year ago. The median gross profit was 64.450 a 71% gross ROI and a significant increase from a year ago when the Gross ROI was 54.1%.
Definition of a “flipped” home…
For the purposes of this report, a flipped home is considered to be any home or condo that was sold during the first quarter of this year in an arms-length sale that had previously had an arms-length sale within the prior 12 months. Since homeowners don’t tend to buy a home only to turn around and resell it within a year, when this does occur it is typically the result of an investor buying a property, renovating it, then reselling it.
Thanks to a booming economy and strong housing market, distressed home sales in the St Louis Metro Area declined by nearly 25 percent (23.42%) in the 12-month period ended January 31, 2020 from the prior 12-month period. As our exclusive, STL Market Report below shows, there were 1,887 distressed home sales (foreclosures, REO’s and short sales)in the most recent 12-month period compared with 2,464 in the prior 12-month period. The median home price of the distressed homes sold declined 1.79% during the same period, from a median price of $56,000 in the prior period to $55,000 in the most recent period.
Distressed Home Sales St Louis MSA
(Foreclosures-REO’s-Short Sales) – Past 12 Months vs Prior 12 Months
Let me begin with this is not a political statement and the purpose of this site is not about politics but about real estate. Having said that, this morning I came across the plans for the housing market that Bernie Sanders is proposing if he is elected President which I had not seen before. Upon reviewing his plan (it is on his official site) I realized that while many of the components of it sound good (like “End homelessness and ensure fair housing for all”) many of his promises in this area sound like things that would negatively impact investors and the housing market as a whole.
The following are the Key Points to the Bernie Sanders housing plan from his website (I have included the complete list):
End the housing crisis by investing $2.5 trillion to build nearly 10 million permanently affordable housing units.
Protect tenants by implementing a national rent control standard, a “just-cause” requirement for evictions, and ensuring the right to counsel in housing disputes.
Make rent affordable by making Section 8 vouchers available to all eligible families without a waitlist and strengthening the Fair Housing Act.
Combat gentrification, exclusionary zoning, segregation, and speculation.
End homelessness and ensure fair housing for all
Revitalize public housing by investing $70 billion to repair, decarbonize, and build new public housing.
Under the “When Bernie is president, he will” section are some of the things he plans to do to accomplish the above goals (this list is rather extensive on his site so I have only included a sampling of the items that appear will negatively impact investors and homeowners):
Enact a national cap on annual rent increases at no more than 3 percent or 1.5 times the Consumer Price Index (whichever is higher) to help prevent the exploitation of tenants at the hands of private landlords.
Allow states and cities to pass even stronger rent control standards.
Implement a “just-cause” requirement for evictions, which would allow a landlord to evict a tenant only for specific violations and prevent landlords from evicting tenants for arbitrary or retaliatory reasons.
Place a 25 percent House Flipping tax on speculators who sell a non-owner-occupied property, if sold for more than it was purchased within 5 years of purchase.
Impose a 2 percent Empty Homes tax on the property value of vacant, owned homes to bring more units into the market and curb the use of housing as speculative investment.
Again, this is not a political piece, but given the strong housing market we have enjoyed over the past several years, which has helped many Americans build equity and recover wealth lost during the housing bubble burst of 2008, I think it’s worth noting proposed plans, by any party or power, that could negatively impact the market. Also, these are just talking points from someone running for office, so whether it’s Bernie Sanders or any other candidate, or even the current President, Donald J. Trump, they can all have ideas but getting them implemented takes cooperation of Congress and that is not always so easy so it doesn’t mean any of their plans ever actually come to fruition.
As you may have noticed, I’ve been pretty optimistic about the outlook for the real estate market this year however, that is not always the case as I call it like I see it. The reason for my optimism is based upon what a true data geek like myself would base it upon, data! So, what’s the data that has me believing 2020 will be a good year for the housing market in St Louis and beyond? Several things:
As I have been reporting here for the past couple of years now, mortgage delinquency and foreclosure rates have continued to decline which show the strength of the economy as a whole as well as the housing industry.
As the US Economic Indicators charts below show, since peaking around 2010, the unemployment rate, 30-year mortgage rate and mortgage delinquency rates have all steadily declines to either record lows or at least the lowest rate in recent history.
As the St Louis unemployment, home prices and rent chart below shows, unemployment in St Louis has fallen to the lowest level in decades and the relationship between home prices and rents show home prices lagging behind rents indicating that we’ll likely see continued, good housing appreciation rates.
As the 30-year fixed rate mortgage chart below shows, mortgage rates are at near record low rates giving buyers much more buying power. In my market update video I shared here a day or two ago I illustrate just how much more buying power this translates into.
As I reported last week, St Louis home sales last year managed to top the prior year slightly, in spite of the low-inventory market we have been stuck in. This shows the demand that is out there.
As I reported earlier this week, the home sales trend for 2020 in St Louis is in positive territory has well.
During the fourth quarter of 2019, 10.2% of the homeowners in St Louis with a mortgage, were underwater on their mortgage, meaning they were in a negative-equity position, according to data just released by ATTOM Data Research. As the table below shows, this is the lowest level of St Louis homeowners that are seriously underwater since 2013 when this data was first tracked. This continues the trend that began in the price quarter with the then lowest rate at 10.5%.
St Louis Underwater (Negative-Equity) Homeowners
(Click on table for live, complete data from 2013-Present)
Foreclosure rates and mortgage delinquency rates have steadily declined over the past couple of years as the housing market, as well as the overall economy, have both continued to improve and thrive. Nonetheless, foreclosures still take place and during 2019 the St Louis MSA had the 8th highest foreclosure rate of the 20 largest MSAs, according to the latest data released by Attom Data Solutions.
As the table below shows, during 2019, in the St Louis MSA there was 1 foreclosure action for every 232 housing units. Philadelphia, PA, had the highest foreclosure rate of the 20-largest MSAs with one foreclosure action for every 133 housing units and San Francisco had the lowest with one foreclosure action for every 631 housing units.
2019 Foreclosure Rates – 20 Largest MSAs
Copyright 2020 – St Louis Real Estate News – All rights reserved – Data Source ATTOM Data Solutions
The foreclosure rate for the St Louis MSA during October decreased 6.0 percent from the month and was down 4.2% from November 2018, according to data just released from ATTOM Data Solutions. As the table below shows, there were, like last month, some mixed results. For example, St Charles County saw a 20% increase in foreclosures from the month before while the City of St Louis saw a 27% decrease from the month before. The U.S. as a whole saw a bigger decline in foreclosure activity than the St Louis MSA did.
There were 762 homes “flipped” in the St Louis metro area during the third quarter of 2019, or 6.3% of the total number of homes sold in the St Louis metro area during the quarter, according to data just released by ATTOM Data Solutions. This is a decline of 15% from the prior quarter as well as a 5% decrease from the prior year. As our table below shows, on a national level, house flipping accounted for just 5.4% of the homes sold during the 3rd quarter of this year, which is a 9% decrease from the quarter before and a 4% increase from a year ago.
Definition of a “flipped” home…
For the purposes of this report, a flipped home is considered to be any home or condo that was sold during the first quarter of this year in an arms-length sale that had previously had an arms-length sale within the prior 12 months. Since homeowners don’t tend to buy a home only to turn around and resell it within a year, when this does occur it is typically the result of an investor buying a property, renovating it, then reselling it.
The foreclosure rate for the St Louis MSA during October increased 11.3 percent from the month before however, it was still nearly 25 percent (24.5%) lower than October 2018, according to data just released from ATTOM Data Solutions. As the table below shows, there were some real mixed results this month. For example, St Charles County saw a 150% increase in foreclosures from the month before increasing from 10 in September to 25 in October but is down over 60% from October 2018. The city of St Louis is the only county of significant size in the St Louis MSA that saw both an increase in foreclosures from the month before (65.8^) as well as an increase from a year ago (43.2%).
During the third quarter of 2019, 10.5% of the homeowners in St Louis with a mortgage, were underwater on their mortgage, meaning they were in a negative-equity position, according to data just released by ATTOM Data Research. As the table below shows, this is the lowest level of St Louis homeowners that are seriously underwater since 2013 when this data was first tracked.
St Louis Underwater (Negative-Equity) Homeowners – 2013-2019
The St Louis foreclosure rate during the 3rd quarter of this year was 1 in every 766 housing units, a decline of nearly 1% from the prior quarter and a decline of over 27% from a year ago, according to data just released from ATTOM Data Solutions. As the table below shows, 6 of the counties in the St Louis MSA saw an increase in the foreclosure rate during the 3rd quarter from the prior quarter and only two counties saw an increase from a year ago.
During August there was one foreclosure action for every 2,040 housing units in the St Louis MSA, a decline of 6.43% from the month before and a decline of 32.78% from a year ago, according to data just released from ATTOM Data Solutions. As the table below shows, only 4 of the counties in the St Louis MSA saw an increase in the foreclosure rate for August 2019 from the month before, but all counties saw a decline from August 2018.
The rate of foreclosure in St Louis during the 2nd quarter of this year was 1 foreclosure filing for every 759 housing units, a decrease of 15.68% from the prior quarter and a decline of 18.54% from the 2nd quarter of 2018, according to data just released by ATTOM Data Research. St Louis has the 73rd highest foreclosure rate of the 220 MSA’s ranked in the report.
As the table below shows, only three counties in the St Louis MSA saw an increase in foreclosure activity this quarter from the prior quarter and, with the exception of Lincoln County, none saw an increase from a year ago.
St Louis MSA Foreclosure Rate By County – 2nd Quarter 2019
The rate of foreclosure in St Louis in May was 1 foreclosure filing for every 2,013 housing units, an increase of 7.7% from the month before but a decline of 18.8% from May 2018, according to data just released by ATTOM Data Research.
As the table below shows, six counties in the St Louis MSA saw an increase in foreclosure activity in May from the month before however, all the counties in the St Louis MSA except 3, saw a decline from a year ago.
St Louis MSA Foreclosure Rate By County – May 2019
There were 528 homes “flipped” in the St Louis metro area during the first quarter of 2019, which equated to 7.7% of the total number of homes sold in the St Louis metro area during the quarter, according to data just released by ATTOM Data Research. This is down 14% from the 1st quarter of 2018 but does reflect a 3% increase from the prior quarter. As our table below shows, on a national level, house flipping accounted for 7.2% of the homes sold during the 1st quarter of this year, which is a 23% increase from the quarter before and an 8% increase from a year ago.
Definition of a “flipped” home…
For the purposes of this report, a flipped home is considered to be any home or condo that was sold during the first quarter of this year in an arms-length sale that had previously had an arms-length sale within the prior 12 months. Since homeowners don’t tend to buy a home only to turn around and resell it within a year, when this does occur it is typically the result of an investor buying a property, renovating it, then reselling it.
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© 2019 – St Louis Real Estate News, all rights reserved
© 2019 – St Louis Real Estate News, all rights reserved
© 2019 – St Louis Real Estate News, all rights reserved
