Busy Realtors ride rising tide of foreclosures

The residential foreclosure market set a sales record in 2008, and Realtors active in this sector anticipate an even bigger year in 2009.

“It’s the busiest year I’ve ever had in my 28 years in the business,” says Mike Weaster, a Realtor with Century 21 Excel.

Weaster sold 779 foreclosed homes — up from 680 in 2007 — for a total of $86.9 million in 2008, despite losing approximately 200 deals during Hurricane Ike.

Tracy Nicola, owner of Houston-based Nicola Real Estate, saw a similar surge in foreclosure sales. Her team recorded 532 transactions in 2008 worth $53.5 million on homes ranging in price from $15,000 to $1 million.

Nicola and Weaster both say sales would have been higher except for a decision by the Federal National Mortgage Association in November to suspend foreclosures until January.

Weaster sees even more of the same in 2009 and beyond.

“It’s steadily picking up right now and I don’t see it leveling off until at least 2011,” he says.

Nicola views prospects for the coming year with a mixture of anticipation and hope.

“I think this year is going to be even higher once the moratorium is lifted later this month,” she says. “But, I hope for the sake of economy that it’s not going to be as bad as I think it’s going to be.”

Market in limbo

Foreclosure listings for Harris County rose only slightly last year (see related box), but that could reflect the calm before the storm.

Nicola says the current state of the local foreclosure market is in a period of “limbo” due to the moratorium, but she expects a windfall of homes to be released over the next two months.

She says there’s no “rhyme or reason” to the local foreclosure market, noting that some subdivisions are being completely depleted by foreclosures while others haven’t even been touched.

Weaster says foreclosures are affecting every neighborhood and every price point in the Houston market.

He recently sold a foreclosed $4 million, 27,000-square-foot home on Lake Woodlands to Farouk Shami, owner of Houston-based Farouk Systems Group, for $2.6 million.

While some in the industry are hopeful that President Barack Obama’s new policies will have a dampening effect on foreclosures, Weaver thinks the situation goes beyond politics.

“It’s all based on the lack of movement of cash within the economy,” he says. “There are still buyers out there, but our biggest issue now is getting them financing.”

The bulk of foreclosures over the past two years involve owners who assumed mortgages they couldn’t pay to buy houses they couldn’t afford.

Weaster says the trend will continue as adjustable rate mortgages written in 2004 and 2005 begin to adjust, forcing more people out of their homes.

While lenders become more picky about financing, owners looking to sell their homes due to economic hardships will find it more difficult in a market where builders are reducing prices of new homes.

Nicola notes that a lot of homes on the foreclosure market were purchased by owners who took advantage of the 100 percent financing option during the hot housing market.

Says Nicola: “I believe that if you don’t put your own money in it, you’re not going to take care of it as well, and that’s why we’re seeing so many homes foreclosed on.”

Annual foreclosure figures tone down fanfare

While some Realtors have found a windfall in home foreclosure sales, the overall numbers suggest a far less volatile market.

The 2009 Foreclosure Forecast for Harris County issued by the Foreclosure Information & Listing Service shows the actual number was 11,837 in 2008, a miniscule increase of less than 100 over the 11,766 foreclosures in 2007.

The 0.6 percent bump is the smallest rate of increase year-over-year since 1999 when actual foreclosures declined 8.7 percent compared to 1998.

The Foreclosure Information & Listing Service owes the small increase to the moratorium imposed by the Department of Housing and Urban Development on areas affected by Hurricane Ike, along with the national moratorium on foreclosures imposed by the Federal National Mortgage Association in November.

The Woodlands-based firm makes the following forecasts:

• There will be some short-term moderation in foreclosure activity during the first few months of the year, thanks to on-going foreclosure mitigation efforts of both the financial industry and the government that started in October.

• Effects of an expected significant rise in unemployment will start impacting the Harris County foreclosure market in the second and third quarters of 2009.

Allison Wollam