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Management Analysis


Why this is important
Foreclosures are a significant financial and emotional drain on all those involved and can cause residual issues.  For example, proximity to a foreclosed home can decrease the value of homes nearby and when several foreclosures have occurred in close proximity, in some cases, crime or property damage has increased.  Homeowners in associations will experience missing dues from those in foreclosure. Renters can lose not only their housing, but also security deposits when property owners or landlords face foreclosure. Cities must also perform added tasks that drain public finances, such as responding to increased code enforcement needs, property abandonment, public safety, and delinquent utility bills.  Entities such as the Community Development Agency (CDA) must also continually increase and improve their outreach, education and assistance programs in response to such a significant increase in foreclosures in a short period of time.

What the data show
This chart shows total notices of pendency (the first formal step in the process of foreclosure) and foreclosures (as represented by Sheriff’s sales) in Dakota County. Notices of pendency peaked in 2009 at 3,886 and have declined over the last four years. Since 2008, foreclosures in Dakota County have been fluctuating around 2,000 foreclosures per year but showed great improvement in 2012 and 2013.  In 2012 and 2013, notices of pendency and foreclosures fell by 44% and 39%, respectively.  According to the chart below, foreclosure rate in Dakota County is heading in the right direction.

Data are not available to clearly identify whether foreclosures in Dakota County are affecting primarily homeowners or investors, but the effects are being felt in different types of communities ranging from older homes to newer developments in growing suburbs.  For example, the most populous Dakota County cities saw the highest numbers of foreclosures in 2013: Apple Valley, Burnsville, Eagan and Lakeville.  As a proportion of households, however, the highest rates of foreclosure in 2013 were in Farmington (1%), South St. Paul (0.9%), and Apple Valley (0.8%).  These rates were lower in 2013 compared to a year ago.

At the beginning of the dramatic increase of foreclosures in 2007, the most common reason for homeowners to be in foreclosure was the loan type (non-traditional, sub-prime) and homeowners being under-qualified for the loan amount.  However, since 2009 there has been a shift in the types of loans that are going into foreclosure.  Most now are fixed-rate mortgages that homeowners could afford, but after suffering a job loss, health issue or change of household income for some other reason, they are now unable to pay what once was an affordable mortgage. 

Nationwide, there was a tremendous upswing in the number of housing foreclosures at the end of the last decade due to a combination of factors, including historically low interest rates and an increase in non-traditional mortgage loan products and sub-prime loans.  Across the country, two different “faces” of foreclosure were playing out:  first, homeowners who were not fully informed when making decisions and as a result, faced personal financial difficulty and second,  investors who became over-extended and unable to sustain their investments with market changes. Different communities across the county experienced foreclosure increases in one or both of these ways.

Last updated: 5/15/2014 5:57 AM