Amid the gloom and doom of the foreclosure crisis, there’s the state of Nebraska.
In the last three months, nearly 870,000 homes throughout the country have entered some stage of the foreclosure process, 29% more than the same period a year earlier, according to RealtyTrac. But in Nebraska, the cornfield-strewn homeland of Warren Buffett, filings are down 91%.
In fact, Nebraska has only recorded 90 foreclosure filings in the past three months. To put that in perspective, that’s one in every 8,676 households. Nevada, which tops the nation’s foreclosure charts (it logged 45,266 filings in the last three months), has seen one foreclosure per every 24 households.
Nebraska isn't the only place where foreclosures appear to be stemming. RealtyTrac’s latest data show a decrease in foreclosure filings in 16 states, including Montana, Massachusetts, North Carolina, New Mexico and Colorado, which have all seen foreclosures filings fall by 30% or more. (See our table below for more information.)
So does this mean things are turning around?
Sadly, this trend may be short-lived, says Erin Smith, senior economist with Moody’s Economy.com. Employment in these areas is starting to weaken and you can’t have a strong housing market when unemployment is rising. “We’re forecasting that while foreclosure rates are performing better in these regions, the gap will shrink,” he says. “I wouldn’t expect these states to be outperforming a year from now.”
Many of these states are bucking the foreclosure trend thanks to their relatively stable labor markets. In Nebraska, for example, the unemployment rate in January was 4.3%, up from 3.9% in December 2008, but still low compared with a 7.6% national average for that month. The major industries in the region — mining, manufacturing and construction — have so far held up.
Even construction has remained strong thanks to the region’s relatively mild real estate price declines, says Smith. Nebraska didn't see the wild housing price appreciation brought on by speculators in Florida and Nevada, for example, so it hasn’t had severe price declines.
Between 2002 and 2006, the median price of existing single-family homes in Omaha, Neb., went up just 13%, according to the National Association of Realtors. Between 2006 and 2008, prices declined just 2%. Contrast this to the Miami Beach/ Ft. Lauderdale metro area, where prices jumped 93% between 2002 and 2006 and have dropped 23% since. (All data are as of year-end 2008.)
Local and community banks also remain fairly healthy in regions that didn’t go through these boom-and-bust cycles, so they've been able to continue lending to homeowners, Smith says.
The foreclosure numbers can also be a little deceiving. The decline in foreclosure rates in some states is simply caused by backlogs in the court systems, says Rick Sharga, senior vice president of RealtyTrac. In New Jersey, for example, foreclosure filings per household were down 74% in February, compared with February 2008, even though the housing situation there isn’t getting any better.
The big surprise in February, in fact, was that foreclosure filings continued to increase overall, despite the foreclosure freezes that the big banks unilaterally implemented last month in anticipation of President Obama’s housing rescue plan. “When you have all these big players agreeing to a freeze, it’s surprising to see an increase,” Sharga says. “And one that pushed February to be the third-highest month [in foreclosure filings] so far.”
A sign, perhaps, that the foreclosure tide has been too strong to contain -- no matter what the government tries to put in place to stop it.
Bucking the Foreclosure Trend
These states have seen foreclosure filings over the past three months decline fairly significantly year over year. But just how long can these positive figures last?
State | Total foreclosure filings
Dec 08 - Jan 09 | Filings
per household | % Change
from year ago |
|---|
Source: RealtyTrac. |
|---|
Nebraska | 90 | 8676 | -91 |
|---|
Montana | 141 | 3089 | -67 |
|---|
Massachusetts | 10221 | 266 | -36 |
|---|
North Carolina | 6999 | 589 | -34 |
|---|
New Mexico | 903 | 955 | -30 |
|---|
Colorado | 13861 | 153 | -30 |
|---|
New York | 10623 | 747 | -28 |
|---|
Texas | 29776 | 317 | -24 |
|---|
Connecticut | 5931 | 243 | -22 |
|---|
District of Columbia | 888 | 320 | -20 |
|---|
Oklahoma | 3273 | 496 | -17 |
|---|
Tennessee | 11237 | 242 | -13 |
|---|
New Jersey | 12149 | 288 | -13 |
|---|
Missouri | 8873 | 298 | -11 |
|---|
Indiana | 13733 | 202 | -5 |
|---|
Ohio | 33690 | 150 | -4 |
|---|
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