With three months left in 2009, the number of metro Atlanta foreclosure notices has already surpassed last year’s record, a sign of how deep the recession has been as well as a portent of further trouble as the economy struggles to regain its footing.
At the current pace, 116,905 area properties will have been listed for foreclosure by year’s end, up 47 percent from 2008, according to a report released Wednesday by Alpharetta-based Equity Depot.
Most homes won’t end up sold at auction, as their occupants make late payments or negotiate mortgage workouts with lenders. But the rising number is both a symptom of deep economic distress and a cause of more woes for the real estate market and economy.
The wave of foreclosures started as the nation rolled first into recession and then into a financial crisis pegged to packages of bad mortgages. Initially the problem was rooted in subprime lending. But lately foreclosures have swept up a wider cross-section of homeowners.
“We are seeing many more that are related to the economy,” said Barry Bramlett, a vice president at Equity Depot.
In the past, many in default would simply sell their homes, he said.
“When you can’t sell property, that takes away one of the largest remedies for curing default. Right now, the market is pretty slow.”
The biggest increases in foreclosure listings are in Cobb, Gwinnett, Cherokee and Forsyth counties, said Dan Immergluck, professor of city and regional planning at Georgia Tech.
“Certainly it partly reflects the worsening regional labor market since 2008. It also reflects a continuing suburbanization of the foreclosure problem and a shift to higher value homes.”
Fulton County has the area’s most foreclosure notices so far this year: 18,631. At the current pace, it would end the year with about 35 percent more than in 2008. Gwinnett, with 17,132 this year so far, is on track for a 71 percent increase.
Of the 13 area counties tracked by Equity Depot, only DeKalb has not yet burst past last year’s total. But at the current pace, DeKalb will finish the year with 13,677 notices, up about 30 percent. Cobb is on track to finish with about 12,833, a 57 percent jump.
Steve Palm, president of Marietta-based SmartNumbers, a real estate consulting and research company, estimated that Cobb has 201,000 homes. Using Equity Depot’s data, that means that by year’s end, more than 6 percent of that number will have been listed for foreclosure.
“There are just so many more people past due,” Palm said.
By contrast, in 2000 just 15,253 homes across the entire region were listed in foreclosure.
Palm said only about one-third of homes listed will end up in foreclosure, in which the lender takes possession and disposes of the property, usually at auction. The difference reflects the kinds of homeowners now getting into trouble.
Many of these homeowners typically have more resources than those in the first waves of foreclosures who took subprime mortgages, Palm said.
“It’s not like with subprime. When you are past due, you will find a way to save your home.”
But savings and help from family have their limits, he said, adding that if the economy does not improve, more people could lose homes.
Ben Bernanke, chairman of the Federal Reserve, this week said that although he expects job growth to lag for some time, the recession seems “technically” to have ended.
Some skeptical economists have warned that even a modest recovery would be brief, with the economy unable to sustain renewed growth for more than a few months.
Continued rises in foreclosures feed the argument for pessimism.
Foreclosures dampen home values and eat away at consumer spending. Jobs related to housing — everything from banking to bricklaying — will remain in a slump.
But many economists doubt are just as skeptical of a “double-dip” recession.
Adrian Cronje, Atlanta-based chief investment strategist of Wilmington Trust Investment Management, said such forecasts depend on a fading impact from the federal stimulus, a rising fear of inflation and a continued chill in the credit markets.
“We worry about it a lot,” Cronje said, “but it is not the most likely outcome in our view.”
PAINFUL RECORD
Foreclosures in the largest metro counties
2007 2008 2009 to date
Clayton 5,765 7,495 7,402
Cobb 5,565 8,187 9,625
DeKalb 11,080 13,677 13,290
Fulton 15,553 18,465 18,631
Gwinnett 8,191 13,332 17,132
Source: Equity Depot
Coming Friday: Can metro home prices bounce back?
