The number of foreclosure filings in Sedgwick County in 2013 dropped 25.6 percent from the year before.
The drop continues a three-year decline from the peak in 2010 and marks the lowest number of foreclosures since the height of the housing boom in 2005.
Until last year, the county experienced a seven-year run of more than 2,000 foreclosures a year, a product of the collapsing pile of subprime loans followed by a deep recession, the loss of 30,000 jobs and a very slow recovery.
The numbers include both residential and commercial foreclosures, but residential foreclosures make up the overwhelming bulk of the total.
The reason for the decrease is that indicators for housing have slowly turned positive, starting with the economy, said Stan Longhofer, director of the Center for Real Estate at Wichita State University
“The overall economy, even though it’s been in fits and starts, has been improving,” Longhofer said. “That’s the most important thing: Do people have jobs?”
Home prices are rising, which can be important in lowering the foreclosure rate, he said. As home prices rise, homeowners gain equity, and some will emerge from being underwater on their home loans.
Having equity encourages homeowners to keep making payments, he said. And, if they have to sell, having equity in the house means homeowners won’t have to come up with cash to repay the original mortgage loan.
“As home prices appreciate, it makes it more possible for people who need to get out from under a mortgage to sell rather than go into foreclosure,” he said.
The real key to lowering foreclosures, said Lawrence Volbrecht of 1st Realty Trust, has been the tightening of bank evaluations for loans. He said that research has shown that a borrower’s debt load and history of late payments is a surer sign of the likelihood he or she will default, rather than the amount equity in the home.
“The rate is way down from where it’s been; it’s almost back to normal,” he said. “Although it’s hard to know what normal is, it’s been so long.”
Falling foreclosures is good for the whole community, said Dwyn Thudium, owner of Crown III Realty.
Foreclosures tend to sell below market average, pulling down prices for nonforeclosure sales.
“What’s going to happen is the prices will rise to be more in line with the norm,” she said.
And as the drag on home prices eases and prices rise, more homeowners will put their houses on the market, returning the market to a more normal volume, she said.