For every 10,000 houses in the state, approximately two foreclosed homes are placed on the market each year. The percentage of foreclosures in Massachusetts is 50 percent lower than the overall rate of foreclosures in the United States; however, the number of foreclosed houses has been steadily rising.
The Rate of Foreclosures in the Last Decade
During 2009, banks planned approximately 21,000 foreclosures in the state, and more than 7,000 of these processes were completed. Between 2009 and 2013, the number of foreclosed homes in Massachusetts consistently dropped. In September 2013, the monthly percentage of foreclosures reached its lowest point in the past 10 years. Since that month, the amount of initiated foreclosures has increased by approximately five percent, yet the percentage of completed foreclosures has remained stable.
The Prices of These Houses
During April 2013, the cost of a foreclosed home was $159,000, and between June 2013 and January 2015, the average value of this type of residence has been substantially reduced. Currently, the median price for foreclosed houses is slightly more than $190,000.
A detailed report suggested that the average worth of vacant houses will likely be reduced during the next year because of the increasing number of foreclosures in the state. In spite of this prediction, the analysis indicates that the median price will probably not drop below $165,000, and due to the elevated number of interested buyers in 2015, the study suggests that the value of foreclosed homes will begin to rise in 2016.
Counties With the Most Foreclosures
Currently, Worcester County has the highest percentage of foreclosed homes in Massachusetts. Some experts believe that the percentage of foreclosed residences in Plymouth County will soon exceed the rate in Worcester County. During the past two years, the amount of foreclosed houses in Essex County has drastically dropped, and in January 2015, the county had 1,502 foreclosures.
In Bristol County, one in every 1,251 houses had been foreclosed in the last year, and on average, one of 1,371 homes in Hampden County was foreclosed during the same time period. In these counties, most of the houses had values that were between $100,000 and $300,000.
A recent analysis shows that Suffolk County, Norfolk County and Middlesex County contain relatively low numbers of foreclosures. With only 222 foreclosed homes, Hampshire has one of the lowest percentages of foreclosures in the state. In Barnstable County, the number of foreclosed houses has decreased slightly during the last two years, and in January 2015, the region had a lower percentage of foreclosures than six counties in Massachusetts.
In the state, 9.8 percent of the homes are vacant. Cities that have a low percentage of empty houses include Norfolk, Hampden and Framington. Moreover, Brighton has a relatively small amount of vacant residences, and in January 2015, only 1.6 percent of the houses in the city were empty.
Certain towns contain more than 1,000 vacant homes. In Plainfield, Mashpee and Hall, more than 15 percent of the houses do not have residents. According to one analysis, the prices for these empty homes are 20 percent lower than the market values of houses that have recently been inhabited on average.
By obtaining a list of homeowners who have not made payments for several months, investors can offer to purchase a house that may be foreclosed in the near future, and when using this strategy, the buyers may reduce the price by 35 percent. Generally, the purchase of this type of home can be completed much more swiftly than the sale of a foreclosed home.
In spite of the benefits, these houses are usually sold in their current conditions, and frequently, the purchaser has to perform repairs after the property has been bought. According to one analysis, the buyer sometimes needs to fix the foundation, the roof or the windows within one year of the purchase.
An extensive study indicated that many mortgages in the region still have variable interest rates. Most homeowners who leave the residences opt to rent an apartment in another city in Massachusetts.
Residences That Are Owned by Banks
Currently, banks own 21.6 percent of foreclosed houses, and during the last year, financial institutions have auctioned off 23.7 percent of foreclosed properties that they possessed. In the state, banks auction off more than 70 percent of the houses that they own at some point. During 2014, the number of auctions was augmented substantially, yet the average price for houses that were being auctioned increased during the same time period.
Income and Foreclosure
Counties that have the highest per capita incomes in the state generally have a reduced percentage of foreclosures. In spite of this trend, Hampshire has the lowest percentage of foreclosed houses in Massachusetts, yet the county’s per capita income is $29,113. The average, yearly earnings in Hampshire are lower than the incomes in 10 other counties in Massachusetts.
A recent study showed that individuals who earn $45,000 to $55,000 per year are less likely to experience foreclosure than those who generate between $35,000 and $45,000 every year. Interestingly, residents of Massachusetts who make $25,000 to $35,000 annually are much less susceptible to foreclosures.
Selling Houses That Have Been Foreclosed
During the past year, 408 foreclosed homes were sold in Boston, and buyers purchased 208 vacant houses in Worcester. In several towns, between 100 and 200 foreclosed houses were bought, and some of these municipalities include Framingham, Brockton, Lowell, Lynn, Quincy and Springfield.
In Haverhill, 98 foreclosed residences were purchased, and 97 of the homes were acquired in Plymouth. According to experts, the amount of foreclosures in these two towns will likely decrease substantially during the next seven years.
The Overall Impact of Foreclosures
According to experts, foreclosures generally reduce the average value of houses in an area; however, they may increase the number of people who are planning to purchase a home. Moreover, a study indicated that a high number of foreclosures can decrease the number of individuals who want to build a new house in a particular area.