Foreclosure Sales Increasing

May 27, 2008 9:00am by

We get New Home Sales today, along with the Case-Shiller Index.

Interesting article on a glimmer of good news in the related issue of Foreclosures and sales in the WSJ: Home Sales Rise in Hard-Hit Areas:

"Home sales are rising in some U.S. metropolitan areas where lenders have slashed prices on foreclosed properties.

Generally, home sales remain weak. The National Association of Realtors reported last week that sales of previously occupied homes in April were down about 18% from the already depressed year-earlier level.

But sales are up sharply in some of the areas hit hardest by foreclosures and falling prices. They include: Las Vegas; Sacramento, Calif.; Fort Myers, Fla.; and inner-city Detroit."

Worth a read . . .

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Source:
Home Sales Rise in Hard-Hit Areas
Buyers Snatch Up Foreclosed Properties After Big Price Cuts
By JAMES R. HAGERTY
May 27, 2008; Page A3
http://online.wsj.com/article/SB121184152415621103.html

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What's been said:

Discussions found on the web:
  1. Giovannoni commented on May 27

    I will add to that the French numbers (not American) on housing. You never get those so I thought I’d post them here in my fav blog (and they’ve just been released).

    -New Home sales= -28% on 2008Q1
    -Sales down in 18 of 22 regions
    -3 regions see 65% sales declines (!… low volumes?)
    -Months of supply= 12
    -Housing starts = -19% between Feb and Apr
    -Housing permits down 16%

    Again those are the numbers for France, a geographically central and highly touristic country which, like the UK, had suffered high levels of speculation.

    Source is Le Monde

  2. Proteus commented on May 27

    In at least some cases the “sales” increase in hard-hit areas is due to the fact that when banks take back a house after a failed foreclosure auction, it can be counted as a sale by those using faulty or deceptive methodology.

  3. Barry Ritholtz commented on May 27

    Excellent data Giovannoni — Thanks for commenting!

  4. SR commented on May 27

    Informal (and non quantative) observation indicates that existing house prices here (PDX) are no longer being further discounted (from a year ago) with sales & closings occuring.

    Btw In Mr. Softie country (North & East Seattle), existing house prices are begining to edge back up (no real discounting occured) from a year ago….with lots of sales/closings completed.

    Again, not a numbers driven statement, just being out & about and asking a lot of the locals.

    Note: No info on New housing prices for PDX/SeaTac region.

    Caveat: Your mileage may vary…..

  5. lunatic fringe commented on May 27

    Knife catchers in the hinter lands. This is good news?

  6. i’m just sayin’ commented on May 27

    Giovanni adds a great point….

    the housing bubble was a global phenom due to global excess liquidity.

    If you’re bearish, that means no decoupling of US-EU-Asia-Latin Am.

    If you’re bullish, I try to get past my own cognitive dissonance and reason through your arguments but I humbly believe that you all need do a ‘channel check’ at your local gas station.

    Seriously, I’ve pulled up to pumps where the prior driver only put $5 into his tank. When things are so bad that people only put 20-30 miles of fuel in your car, that will ripple through the economy.

    As Bill Gross puts it, the consumers are the plankton in the financial ecosystem. As the plankton die off, the big fish will follow.

    Obviously, I’m bearish but I wish I could be bullish and go double long the QLDs.

  7. Mr Mortgage commented on May 27

    this is how it works…

    1000 people get a smokin deal at $125k off recent comps or the past foreclosed note value.

    This brings down the value of 100k similar homes in the regions forcing 30% of them into a negative equity situation.

    Of the 100k, 30% default due to the negative equity situation and 25k of those end up as REO nine months later.

    Yes, people are getting ‘great deals’ but entire neighborhoods and regions in the bubble states are being marked-to-market overnight.

    For example, CA hit a record median high of $484k in April 2007. In Aug it was still high at $465k. By Jan it was $383k and now $354k.

    That is 27% in 9 months! This is partially due to total lack of loan programs of course, but bank REO SALES picking up dramatically has added significant downward pressure.

    REO is counted in the existing home sales number and is considered a ‘comp’ to an appraiser.

    Reo was 38% of all existing home sales in the state of CA in Apr according to dataQuick. It was less closer to 5% a year and a half ago.

    While this WSJ story may sound good, it is the furthest thing from it.

    Best,

    mr Mortagge

  8. Mr Mortgage commented on May 27

    the above numbers are only an example of how the snowball rolls and it is absolutely rolling that way. Who knows, those numbers could be dead on it is so bad in CA…trust me, I am here in the middle of it all! -Best Mr Mortgage

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