The state of real estate in Greater Lowell

On Friday, the Lowell Sun carried a front-page story about real estate trends in Greater Lowell in which I provided some optimism which in turn was countered by others. Throughout the run-up of the housing bubble in 2003-2006, I took the opposite view, telling all who would listen that the situation would end badly (which it certainly did). But now, I see some positive indicators that are readily available on the registry of deeds website,

Two statistics in particular stand out: from the beginning of October until now, the number of mortgages being recorded is way up and the number of foreclosure-related documents is way down when compared to a year ago. For the entire registry district, which includes Lowell and nine surrounding towns, the number of mortgages recorded from October 1, 2010 to February 24, 2011 is up 38% from the same time a year ago (6536 v 4744) while the number of foreclosure deeds is down 50% (109 v 218). The number of orders of notice (the first step in a new foreclosure) is also down by 57% (246 v 602). The increase in mortgages is a positive sign because it indicates more and more people are refinancing which in turn means credit is becoming more available to homeowners. If this continues, it will eventually translate into more buyers for homes that are on the market and should start to edge home prices up a bit from the precipitous drop they experienced since 2007.

For Lowell itself, the mortgage numbers are good but not as pronounced as for the suburbs. Mortgages in Lowell for the October thru February period this year are up 11% compared to a year ago (1065 v 958) while foreclosure deeds are down 50% (61 v 123) and orders of notice are down 64% (112 v 311).

Some commentators are saying that the decrease in foreclosure activity that we see here is just a temporary lull brought on by some court decisions adverse to the lenders. While that is true to some extent, the five-month long stretch of positive numbers tells me that this is more than a temporary stand-down of foreclosures and instead represents a positive trend that signals a more realistic approach by lenders to these troubled properties. Lenders, I believe, are being more reasonable about modifying loans and in assenting to short sales in which the home owner is allowed to sell the house for less than the outstanding balance of the mortgage. Both of these trends curtail the number of foreclosed properties and decrease the risk of properties being left vacant for extended periods of time.