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Region, state avoid booming foreclosures seen across U.S.
By Molly Parker
Staff Writer
There’s not much in common between the $826,000 Ashley Avenue home for sale on Folly Beach near the water and the $161,000 Barclay Avenue residence in a modest North Charleston neighborhood that is also on the market.
Except for this: Both are in foreclosure.
More and more people in Charleston County are getting booted from their homes or at least falling far enough behind on payments to start the lengthy foreclosure process.
“Our foreclosure program has multiplied 100 times from this time last year,” said Debbie Kidd, director of the Homeownership Resource Center, a division of North-Charleston based Family Services, a nonprofit agency.
Kidd’s organization has counseled nearly 450 homeowners and spent nearly $200,000 in an effort to prevent that dreaded eviction notice from hitting mailboxes across the state.
“We see them from trailers all the way up to the multimillion dollar homes,” she said.
The success rate is about 70%. But the reality is that some homes can’t be saved, she said.
Through November of last year, 574 homeowners found themselves fighting foreclosure, according to data provided to the Charleston Regional Business Journal by RealtyTrac, the nation’s leading online foreclosure data tracker.
Two years prior, 408 Charleston County homeowners were in a similar situation, followed by a slight increase of 462 homeowners in 2006.
November was a particularly rough month, breaking a record for 2007 as 80 people faced foreclosure; of those, 41 lost their homes.
Of the total number of Charleston County residents served legal notices last year, 206 homes were seized by lenders for nonpayment, or roughly one home for every 775 in the county.
In 2006, only 63 homes were foreclosed on, or one for every 2,239 homes.
The rates were worse in Berkeley and Dorchester counties. Through November of last year, 111 homes in Dorchester County went into foreclosure, a rate of one for every 389. In Berkeley County, 161 homeowners were evicted, or roughly one for every 381.
Others worse off
Still, neither the tri-county area nor the state of South Carolina faced the scary foreclosure rates that have plagued other regions.
“We had some speculative buying here, but not like in California where people were buying four and five units in a condo before the construction started, and then selling at a huge profit.
The people caught with those properties are the ones that had problems,” said Wil Riley, president of the Charleston Trident Association of Realtors and a real estate agent with Century 21 Properties Plus in Summerville.
Through November of last year, South Carolina ranked 20th in foreclosure rates, sandwiched between Illinois and Alabama. One South Carolina home was foreclosed on for every 632 in the state, compared to one per every 594 in Illinois and one for every 651 in Alabama.
One for every 104 homes was foreclosed on in Michigan, the state that fared worse last year (through November). Nevada, Georgia, Colorado and Indiana also made the top-five list.
In raw numbers, California posted the most foreclosures at 54,173, or a rate of about one foreclosure per every 240 homes.
The national rate of foreclosures was one per every 350 homes.
But there is a bright spot buried in the numbers, at least for the Palmetto State.
If December proves to follow suit with the rest of 2007, South Carolina is likely to post a significant dropoff in foreclosures compared to the previous two years. In 2005, about 4,050 homes were foreclosed on, and in 2006, about 4,560. Through November, about 3,050 homes were foreclosed on.
But those numbers can be misleading, Kidd said, because in South Carolina, a lender must serve a legal notice to begin the foreclosure process, and that may not happen until after months and months of missed payments.
In some areas of the country, foreclosure notices are served 90 days after the first missed payment.
RealtyTrac concedes its state-by-state comparisons are only as true as data collection allows. A patchwork of rules and reporting regulations regarding foreclosures can skew the matchup, said Daren Blomquist, marketing and communications manager for the Irvine, Calif.-based company.
No discrimination
No matter how you figure it, foreclosure rates are expected to continue the upward climb across the nation, Blomquist said.
The rising tide has prompted numerous state and federal measures ranging from efforts to crackdown on lending practices to those aimed at keeping people in their homes by forgiving certain debts and expanding loan programs offered by the Federal Housing Administration.
Despite the government’s best efforts, Blomquist said, “It looks like there’ll be another surge of foreclosure activity in 2008 because in some ways we’re just seeing the tip of the iceberg in terms of the resetting loans.”
It seems foreclosures do not discriminate. The housing market turndown is seizing grand mansions and modest bungalows alike.
In fact, Blomquist said, between 2005 and the first quarter of 2007, there was a slight increase in the rate of foreclosures on homes valued at $750,000 and above.
Banking on bad news
In the past, foreclosed homes have been coveted parcels among bargain hunters.
But the unusual thing about this recent surge is that interest in the after-sale foreclosure market didn’t follow that trend, Blomquist said.
Subprime and exotic mortgages largely are to blame for the slowly moving foreclosure market.
Once considered diamonds in the rough, foreclosed properties don’t carry the same equity they once did — sometimes none at all — because of the advent of no-money-down loans.
“I think people are being very cautions in the market,” he said. “Even though more properties are available, people are somewhat gun-shy.”
All the bad news has had a chilling effect on the industry. But a prudent buyer can still get a good deal — and a low-interest mortgage to boot, said David Krahn, president of the South Carolina Mortgage Brokers Association and owner of First Rate Mortgage in Charleston.
His advice: Find a licensed broker, and don’t believe deals that seem too good to be true.
“It’s not as hard to qualify for a loan as some people think it is,” he said.
Riley seconded that notion.
“The smart buyers will start looking and getting the deals now,” he said. “Eventually the inventory will dry and the prices will go back up and the people that waited are going to get left in the cold.”
Molly Parker is a staff writer for the Business Journal. E-mail her directly at mparker@setcommedia.com.
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