The number of Utah homeowners who received a foreclosure filing in June jumped nearly 141 percent, compared with the same month last year, according to a report released Wednesday.
The 140.54 percent increase was almost three times the national increase of 53.28 percent for the same period, the report from RealtyTrac said.
The most dramatic increase came from Utah County, where the Provo/Orem area ranked 37th among metro areas nationwide in the rate of foreclosures and experienced an 810 percent increase in foreclosure filings from June 2007 to June 2008.
The Beehive State had a rate of one foreclosure for every 600 households last month. The national average for the period was one foreclosure in every 501 households.
Nationally, the percentage of foreclosures declined slightly from May 2008 to June 2008, falling 3.4 percent from month to month. However, in Utah, the percentage of foreclosures increased 12.35 percent from May to June of this year.
Overall, Utah ranked 10th among the states in the rate of foreclosure filings.
"The basis of the problem is that prices went up so far so fast, incomes just couldn't handle it," said Wells Fargo economist Kelly Matthews.
He attributed part of the crisis to lax lending practices that promoted low teaser interest rates to people who probably shouldn't have qualified for home loans, and now the rates have increased, resulting in large numbers of foreclosures.
Many buyers, particularly in Utah County and in the St. George area, put themselves in difficult financial positions by purchasing outside their means. Matthews said that factor, coupled with extremely high appreciation rates, combined to create a housing bubble that has begun to burst.
The St. George area ranked 27th among metro areas nationally for its rate of foreclosure filings in June, with one foreclosure for every 245 properties the highest rate among cities in Utah. St. George had a 13 percent hike in foreclosure filings from May to June of 2008 and 174 percent year-over-year increase.
Salt Lake City was ranked 89th in the nation, with a rate of one foreclosure filing for every 662 households. The percentage change from June 2007 to this past June was 60 percent.
"It's understandable about what happened in St. George, because clearly they dug the hole deeper than we did on the Wasatch Front," Matthews said. "Homes (in St. George) were appreciating at 35 percent, instead of 20 percent along the Wasatch Front, creating an even bigger affordability problem."
Foreclosure filings increased from a year earlier in all but 11 states, RealtyTrac, based in Irvine, Calif., stated. The report monitors default notices, auction sale notices and bank repossessions throughout the United States.
Economists project 2.5 million homes nationwide will enter the foreclosure process this year, up from about 1.5 million in 2007.
Analysts also say the mortgage industry's effort to assist troubled borrowers is being overwhelmed by the magnitude of the foreclosure crisis, and Treasury Secretary Henry Paulson said earlier this week that many foreclosures are "not preventable," with borrowers who "took out mortgages they can't possibly afford, and they will lose their homes."
For the third month in a row, California and Florida cities accounted for nine out of the top 10 metropolitan foreclosure rates among the 230 metropolitan areas tracked in the report.
The states of Nevada, California and Arizona continued to lead the nation in the rate of foreclosure filings, the report said.
Nevada was up nearly 85 percent from June 2007, with one in every 122 households receiving a foreclosure filing. California had second-highest rate, with one in every 192 properties receiving a foreclosure filing in June, while Arizona ranked third at one in every 201 households.
Matthews said the Utah market may be "halfway through" its economic pains and could see further struggles for the next year."There is still at least as much reduction in home prices left ahead of us as has occurred in the past," he said. "We're down about 8 to 10 percent in sales prices from the peak, and we have another 8 to 10 percent reduction in average sales price to go."
Contributing: Associated Press. E-mail: [email protected]
E-mail: [email protected]