Once the foreclosure capital of the nation, Las Vegas dropped to No. 25 in the third quarter with one foreclosure filing for every 139 households, RealtyTrac online listing service reported Wednesday.
Stockton, Calif., was the top foreclosure city with one foreclosure filing for every 67 households, more than three times the U.S. average.
The report shows third-quarter foreclosure activity decreased from a year ago in 131 of the nation's 212 metropolitan areas with a population of 200,000 or more. Foreclosure activity decreased from the previous quarter in 134 of the metro areas tracked in the report.
Las Vegas had a total of 6,062 foreclosure filings in the third quarter, down 31 percent from the previous quarter and down 71 percent from the year-ago period, RealtyTrac found. That includes 2,714 notices of default, 1,400 auction sales and 1,948 real estate-owned properties, or homes taken back by the bank.
"At least on the surface, it's good news that fewer foreclosures are happening, which is the most visible sign of pain in your housing market," RealtyTrac vice president Daren Blomquist said. "But I would mention that we still see a lot of stress in Las Vegas."
With 59 percent of homeowners underwater, or owing more on their mortgage than their home is worth, there are still a lot of homeowners at risk of foreclosure, he said.
Foreclosure activity decreased from a year ago in 12 out of the nation's 20 largest metro areas, led by San Francisco (36 percent), Detroit (31 percent), Los Angeles (29 percent), Phoenix (27 percent) and San Diego (26 percent).
The biggest annual increases in foreclosure activity were in New York (69 percent), Tampa (43 percent), Philadelphia (34 percent), Chicago (34 percent) and Seattle (20 percent).
The third-quarter decrease indicates that most of the nation's housing markets are past the worst of the foreclosure problem, including Las Vegas, Blomquist said. Foreclosure activity in September was below September 2007 levels in 58 percent of the metro markets.
"If they haven't been foreclosed on yet, there's less chance they will be," the RealtyTrac executive told the Review-Journal. "They made it through the worst of the gantlet. We have seen home prices increase, which gives some people hope to hang on. That's the silver lining."
Still, rebounding foreclosure activity in some markets remains a threat to home price stability and growth in those markets, Blomquist said.
"The rebounding foreclosure activity tends to be in markets where the foreclosure process slowed down most dramatically in the last two years, resulting in a buildup of foreclosures in limbo that lenders are finally working through this year," he said.
Las Vegas may see a "catch-up surge" in foreclosure activity, but banks have figured out a better way to handle distressed properties, Blomquist.
For one thing, they're approving more short sales, or homes sold for less than the principal mortgage balance. Short sales now account for nearly half of all home sales in Las Vegas, compared with about one-fourth a year ago, the Greater Las Vegas Association of Realtors reported. Foreclosures, meanwhile, have fallen to just 13 percent of total sales.
California cities, including Stockton, accounted for the seven highest metro foreclosure rates in the nation during the third quarter, although foreclosure activity decreased from a year ago in all seven metros.
Seven Florida cities ranked among the top 20 metro foreclosure rates in the third quarter.
RealtyTrac provides a count of the total number of properties with at least one foreclosure filing entered into the firm's database. Some foreclosure filings entered into the database during a quarter may have been recorded in previous quarters.
Data is collected from more than 2,200 counties nationwide, representing more than 90 percent of the U.S. population. The full report, along with an interactive heat map and relevant charts, is available at www.realtytrac.com.
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