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Capital Region foreclosure rate decreases but more homes are 'underwater'

Capital Region foreclosure rate decreases but more homes are 'underwater'

The real estate market for New York state and the Capital Region is getting some welcome news: Home

The real estate market for New York state and the Capital Region is getting some welcome news: Home foreclosures are down across the state and for most counties locally.

A report released Thursday by Realtytrac, a leading national broker of foreclosed homes, indicates the number of properties receiving foreclosure notices in New York declined 21 percent in April compared with April 2009. However, from March to April, foreclosure notices statewide increased 4 percent.

The website includes year-to-year and month-to-month foreclosure statistics for the Albany/Schenectady/Troy metropolitan area. The rate of home foreclosures was 29 percent lower in April 2010 than April 2009, and 15 percent lower than March 2010.

In a breakdown of individual counties, while Schenectady saw a 5 percent increase in foreclosures on a year-to-year basis, there was a decline of 34 percent from March to April, from 32 to 21.

Albany County saw the greatest improvement both in terms of the number of properties going into foreclosure and on a percentage basis in the region. A total of 28 homes went into foreclosure last month, down from 46 in March, a 39 percent reduction. The decline was even steeper from April 2009: 60 percent.

For Saratoga County, 13 homes went into foreclosure last month, compared with 16 in March, a 19 percent decline. Compared with April 2009, the reduction was 23 percent.

Montgomery County also saw a decline of three homes going into foreclosure on a month-to-month basis, 10 in April vs. 13 in March.

Only two properties went into foreclosure in Fulton County in April, down one from March.

The website reports Schoharie County had no homes go into foreclosure in March and one in April.

However, another website that follows real estate market trends both nationwide and locally reported somewhat sobering news Thursday. Zillow.com says the number of Capital Region homeowners “underwater” — that is, those who owe more on their mortgages than the home is worth — rose to 13.3 percent in the first quarter of this year from 11.3 in the first quarter of 2009, and 10.4 percent in the fourth quarter. A Zillow official says the estimate includes only single-family homes, not multifamily houses or apartment buildings.

In both Poughkeepsie and New York City, the underwater rate is slightly higher, at 14 percent. Other areas of the country are in much worse shape: 44 percent in the Miami metropolitan area and a staggering 80 percent In Las Vegas. The status of being underwater is often a precursor to entering foreclosure proceedings.

Greater Capital Region Association of Realtors President Laurene Curtin says the area held up well in the fallout of the housing market’s nationwide collapse two years ago, and she expects the region to be insulated from any negative trends in the future. “GlobalFoundries is coming in, which will increase the area’s population by over a thousand,” Curtin said.

The computer chip factory is currently under construction in the Luther Forest Tech Park in Malta and is expected to begin manufacturing in late 2011 or early 2012, with an initial workforce of over 1,400.

Curtin also said she expects the housing market to get a boost from the expected expansion of the region’s nanotech industry, as well as the opening of GE’s advanced battery plant in Schenectady. She said companies will recruit highly skilled employees from out-of-state or hire them from local colleges like RPI.

In the short term, Curtin said Realtors may be feeling the pinch from the expiration of the first-time homebuyers tax credit on April 30. “We’re waiting to see what happens this month,” she said. “That may tell us what kind of market we’ll see for the rest of the year.”

While Curtin concedes that home values “have dropped a little bit,” she said she has not dealt with many sellers who are underwater. “On occasion I’ll see it, a homeowner who came in two years ago and bought a home for $150,000 and also financed closing costs. The value hasn’t increased, and they have the added debt,” she said.

Albany bankruptcy attorney Richard Croak warned that the number of foreclosure notices in the Capital Region may increase in the near future. He said the area may get hit by a “double whammy: falling property values and the most outrageous property taxes in the world.”

Croak added the city of Schenectady, which recently went through a property reassessment, is “one of the hardest-hit areas — a lot of subprime mortgages with low property values and high property taxes.”

Croak said his office is getting more phone calls from homeowners who are underwater and seeking advice. Many are asking about short-selling their mortgage, which he says is an attractive option compared to foreclosure, because the homeowner will pocket up to 80 percent of proceeds from the sale of the home.

The best you can do under foreclosure is 40 percent, Croak said.

He predicts many will shed the burden of an unaffordable mortgage and become renters. “It’s a really good renters’ market right now. You can rent a nice house or apartment for $1,200 a month right now,” he said.

Longtime Stockade resident and Realty USA broker Joe Fava agreed that the city’s reassessment has made for a difficult real estate market in the Electric City. He describes the new property assessments as “out of whack,” and said he knows of at least one resident who went into foreclosure because of a ballooning tax bill.

Fava added: “The tax situation is very tough for some people. Assessments in Schenectady are really a problem. It’s hurting real estate values.”

As for the rest of the area, he says the region and most of upstate has benefitted long-term from conservative pricing. He said home prices never skyrocketed here as in other parts of the country, so the local market wasn’t hit as hard when the real estate bubble burst. Fava added that any drop in median sale prices right now might be part of a market correction since “most homes for sale are sitting there for several weeks.”

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