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Foreclosures in Davison County have cropped to pre-recession levels. (Daily Republic graphic)

Davison County leaving foreclosure spike in rear-view

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Foreclosures were down significantly in 2013 in Davison County, continuing a post-recession trend skewed only by an abrupt rise in 2012.

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The number of lis pendens — a notice given at the start of the often lengthy foreclosure process — filed last year in Davison County was 23, down from 32 in 2012, according to the Davison County Register of Deeds office. That’s the fewest in the county in a single year since 58 were filed in 2007 at the outset of the housing crisis.

For homeowners able to make enough payments to stave off foreclosure, the process may never go beyond a lis pendens filing.

For others unable to stop the foreclosure, the sheriff’s office is tasked with auctioning the property to the highest bidder in what’s known as a sheriff’s sale.

Anyone can show up at a sheriff’s sale and try to outbid the lender. If no one does, the lender takes ownership of the home and can resell it on the open market.

There were 13 sheriff’s sales last year in Davison County, a decline from 24 in 2012, and an even greater decline from 36 in 2007, according to Kathye Fouberg, a civil deputy with the Davison County Sheriff’s Office who deals with foreclosures.

Fouberg said one sheriff’s sale has already taken place this year and another is scheduled for later this month.

Local sheriff’s sales are not ordinarily well attended and many times only the lender shows up, Fouberg said. The amounts owed on the mortgages of many of the homes auctioned recently are nearly as much as the homes are worth, which could explain the poor attendance, she said.

“The days of being able to buy a foreclosed home for next to nothing are over,” Fouberg said.

After a property is sold, the affected property owner still has time, typically six months to a year, to redeem the property. If the property isn’t redeemed by the original owner, a sheriff’s deed is issued to the lender or highest bidder, meaning ownership of the property is officially transferred.

There were 13 sheriff’s deeds filed last year in Davison County, down from 16 in 2012, according to the Register of Deeds office.

Foreclosure filings in Davison County trended downward from 2007 to 2011, but went up in 2012 before falling again last year. Bryan Hisel, executive director of the Mitchell Area Chamber of Commerce and the Mitchell Area Development Corp., said the rise in 2012 was most likely a lingering effect of the housing crisis.

“You may have had a lag effect,” Hisel said. “About the last thing most people want to do is lose their property.”

Even at its recent peak in 2007, the foreclosure rate in Davison County still consisted of only a small percentage of homeowners, Hisel said.

According to the U.S. Census Bureau, there are about 5,400 owner-occupied housing units in Davison County and about 3,300 have a mortgage. With 23 foreclosures initiated in 2013 in Davison County, the foreclosure rate was well below 1 percent.

“We just did not suffer as intensely as other parts of the country,” Hisel said.

The foreclosure rate in South Dakota is better than the national average, according to recent data from RealtyTrac Inc., a company that tracks foreclosure rates.

South Dakota had a foreclosure rate of one in every 7,080 housing units in December. RealtyTrac’s foreclosure rate for South Dakota is based on data gathered from only five of the state’s 66 counties — Minnehaha, Lincoln, Union, Meade and Pennington. The national rate for the month was one in every 1,136 housing units.

Kevin Watt, a vice president at First Dakota National Bank in Yankton, said statistically, South Dakota has always been good at avoiding foreclosures, which he said are not only damaging to the borrower and lender, but also the community as a whole.

“We make every effort to work with the customer to try to help them get back on track,” he said.

New regulations put in place as a result of the housing crisis have made that even more important, Watt said.

“We’re forced into giving them more information about their options,” Watt said. “I just see things getting better and better, unless we get into that next cycle of downturn in the economy.”

When compared to its six neighboring states, South Dakota’s foreclosure rate was better than the rates in Iowa, Minnesota and Wyoming, but worse than the rates in Montana, Nebraska and North Dakota.

Real estate trends

The numbers are encouraging for anyone in the real estate industry, like Denny Robinson, manager of Fischer, Rounds and Associates Inc., a real estate office in Mitchell.

“It’s good news when foreclosures are way down,” Robinson said. “That’s good news for everybody.”

Even better news for Robinson and others in the real estate industry, home sales have increased as the number of foreclosures has declined.

The number of houses sold in Mitchell and the surrounding region rose from 237 in 2012 to 298 in 2013, a nearly 26 percent increase, according to statistics provided by Robinson.

At the same time, the median price of homes in the region went up 2.6 percent, from $109,900 in 2012 to $112,750 in 2013.

The local trend mirrors a rise in new and existing home sales nationwide. An estimated 428,000 new single-family homes were sold in the U.S. in 2013, up 16.4 percent from 368,000 sold in 2012, according to a report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development.

Sales of new homes in the Midwest reached a seasonally adjusted annual rate of 60,000 in December, up more than 17 percent from November, and up 25 percent from December 2012, the report says.

There were 5.09 million existing homes sold in 2013, up 9.1 percent from 2012 and the most since 2006, when sales soared to an unsustainable high of 6.48 million, according to a report by the National Association of Realtors.

Robinson said there is still high demand for single-family homes, despite the increase in the number sold in the region last year.

“We need houses to sell,” Robinson said. “Everybody is short of listings.”

There is a shortage of affordable singlefamily homes priced between $90,000 and $160,000 in Mitchell, Hisel said.

“There is more demand than supply in that range,” he said. “We’re scratching our heads about what we might do about that.”

Home buyers in the region seem to have more stable jobs and reliable incomes than they have in the past, Robinson said. The numbers appear to back that up, as the decline in foreclosures has been accompanied by a consistently low unemployment rate.

The non-seasonally adjusted unemployment rate in Mitchell was 2.9 percent in December, up from 2.7 percent in November, but also the sixth consecutive month the city’s unemployment rate stayed below 3 percent.

The statewide unemployment rate was 3.6 percent in December, up from 3.3 percent in November, but down from 4.5 percent in December 2012.

The average unemployment rate in Mitchell in 2013 was 3.3 percent, down from 3.6 percent in 2012 and the lowest since 2008, when the city’s average unemployment rate was 2.6 percent.

“We’re ready for incremental population increase,” Hisel said. “We have work available for people, and that’s a good place to be.”

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