By Brian O'Connell
NEW YORK -- Foreclosures are way up in several states -- including Nevada -- and that could prove to be a significant on the still recovering housing market.
Nevada has a 334 percent increase in foreclosures in February. Part of the reason for the tripling is that foreclosures have been low since late 2011 because of a new law requiring banks to prove they have the right to foreclose. But banks are increasing the rate of foreclosure filings while some real estate experts say could lead to a "foreclosure tsunami" later in the year.
A RealtyTrac.com report says that other stats seeing a major upturn in foreclosures include Maryland (up 319 percent from a year ago), Washington (up 172 percent), New York (up 139 percent) and New Jersey (up 70 percent).
RealtyTrac points out that while U.S> foreclosures were up in February, home repossessions are actually down 25 percent year to year. Officials at the Irvine, Calif., real estate services provider say the foreclosure bonfire is largely extinguished after five years of historically high activity.
Not completely, though.
"At a high level, the U.S. foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years," says Daren Blomquist, vice president at RealtyTrac. "But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system. Foreclosure starts have been steadily building in those states over the last several months and likely will end up as bank repossessions or short sales later this year."
Blomquist points to Oregon's neighbor, Washington, along with other states as examples of heightened foreclosure activity.
"These new foreclosure hot spots include states like Washington, where seven straight months of rising foreclosure activity pushed the state's foreclosure rate to fifth-highest nationwide," he said. "That's the highest it's ever been in our report. Maryland has had eight straight months of rising foreclosure activity and places the state's foreclosure rate among the top 10 nationwide for the first time since July 2010."
All told, U.S. foreclosure starts were up in 32 states in February, with some states showing alarmingly high rates.
The increase in foreclosures also signals that the U.s. housing market is not out of the woods yet. Until the inventory of foreclosed homes is largely sold off, there can't be significant recovery in the nation's residential housing market.