Western states lead in foreclosure rankings

"Arizona is stuck in a vicious cycle right now," says Lee McPheters, research professor at the W. P. Carey School of Business and director of the JPMorgan Chase Economic Outlook Center. "Homes come onto the market from foreclosure and that weakens prices. Lower home values put more properties under water, and that negative equity situation often leads to foreclosures." A respected regional forecaster, McPheters edits the Western Blue Chip Economic Forecast, which compiles the forecasts of economists in 12 Western states to generate a consensus forecast for the region.

States in the Western region accounted for six out of the top ten states with the highest rate of foreclosure filings in 2010. Nevada led the nation, with one of every 11 homes receiving a foreclosure filing. Next in the rankings were Arizona (one in 17), Florida (one in 18), California (one in 25) and Utah (one in 29). Idaho (one in 34) was in eighth position and Colorado (one in 40) was tenth.

The national rate of foreclosure filings was one out of 45 U.S. housing units. Filings tabulated by RealtyTrac include not only foreclosed reposessions by lenders but also legal notices issued for default and notices of trustee or foreclosure sales. The number of properties with foreclosure filings nationally in 2010 was a new record of 2.9 million.

California had activity for 546,669 properties, or nearly one out of every five of all U.S. foreclosure filings for the year. Nevada recorded the nation's highest foreclosure activity for the fourth consecutive year. According to RealtyTrac, 57 percent of resales in Nevada were foreclosed properties, the highest percentage in the nation for 2010.

In a related report, the Case-Shiller Home Price Index showed home prices down in Las Vegas by 4.7 percent in 2010. Arizona ranked second in foreclosure filings for the second consecutive year. The rate of one in 17 housing unit is equivalent to 5.9 percent of properties with filings.

Nationally, the rate was 2.2 percent in 2010. The Case-Shiller Home Price Index for Phoenix fell 8.7 percent in 2010. Further price declines may be in store for Arizona and Phoenix. According to real estate research firm Zillow, some 70 percent of Phoenix homes have negative equity, the highest proportion among the 25 largest metro areas. Nationally, Zillow estimates negative equity is now at 27 percent.