richardhowe.com

I’m starting to see some early indicators of a turnaround in real estate in the Greater Lowell region. To paraphrase Winston Churchill, it may not be the beginning of the end of the housing slump, but it could very well be the end of the beginning.

Here at the end of November, two things give me cause for guarded optimism. For the second straight month, foreclosure activity is down substantially across the region and the frequency of mortgage refinancing is up, although that’s mostly the case in the Greater Lowell towns and not the city itself, at least not yet.

The particulars: In November 2010, the number of Orders of Notice (the document that commences the foreclosure process) recorded at the Middlesex North Registry of Deeds was down 61% compared to the number from November 2009. The number of Foreclosure Deeds (the post-auction document that transfers title from the homeowner/debtor to the new owner) was down by 50%. The foreclosure numbers were particularly encouraging for Lowell, with Orders of Notice for city properties dropping from 57 in November 2009 to just 17 in this November (a 70% decline). Regarding Foreclosure Deeds for Lowell properties, the 9 recorded in November 2010 was the smallest amount for any month since December 2006.

The other positive indicator is the number of mortgages being recorded. In November 2009 there were 1102 for the entire registry district. This November, that jumped to 1571, an increase of 43%. This rise in new mortgages is almost an exclusively suburban phenomenon since mortgages in Lowell only increased by 2%. For the nine towns in the district (Billerica, Carlisle, Chelmsford, Dracut, Dunstable, Tewksbury, Tyngsborough, Westford and Wilmington), mortgages were up 53% for November.

Admittedly, not everything is rosy. The number of deeds recorded for the district was down 15% compared to last November, corroborating recent media reports that home sales are hurting. And while the number of new foreclosures is way down, there are still many in the pipeline that have to work their way through the system. Each foreclosure is like an anchor that drags down the value of the houses around it. (A big reason the on-going refinance boom has bypassed Lowell thus far is that values in the city have dropped more than those in the suburbs because of all the urban foreclosures we’ve seen).

The easing of the rate of foreclosures that we’re seeing (in October, Orders on Notice were down 23% and Foreclosure Deeds down 29%), will slow the decline in values in Lowell allowing the suburban refinancing boomlet to spread into the city. Back in late 2002 and early 2003, it wasn’t home sales that started the upward march of prices (that led to the real estate boom), it was a frenzy of refinancing. The busiest period we’ve ever had at the registry of deeds was from January through September 2003 and that was totally driven by refinancing. That spring and summer’s activity served as a catalyst for the rapid increase in home prices that we experienced in the following years. I hope that what we’re seeing now is (the good parts of) history repeating itself.