RealtyTrac, which assembles foreclosure data on a state and national basis, notes that one in every 483 U.S. households received a foreclosure filing during the month of May. This is the highest monthly foreclosure rate since they began tracking foreclosures in January 2005.
Here’s the breakdown:
• Lenders took possession of 73,794 houses in May — 158% greater than the 28,548 REOs in May 2007
• 1.2 million foreclosed single-family homes will enter the market
• Foreclosures will account for 30% of national home sales in 2008
• Bank repossessions (REOs) accounted for 28% of total foreclosure activity
• Default notices increased 35% year over year
• The 3 highest foreclosure rates by state are Nevada (1 in every 118 households), and California (1 in every 183) Arizona’s (1 out of 201) in May 2008
• Auction notices were up 13% year over year (but decreased 3% from the previous month)
• Foreclosed properties typically sell for ~20% less than comparable homes
• Foreclosed properties depress local home prices by 6%
Wow, those are pretty robust numbers. Based on the foreclosure data alone, it appears that Housing is accelrating to the downside — we are nowhere near a sustainable bottom yet . . .
>
Click thru for individual state results
>
Sources:
Foreclosure Downpour Continues in May
RealtyTrac, Friday, June 13, 2008 2:00 AM
http://www.foreclosurepulse.com/archive/2008/06/11/45351.aspx
Foreclosures Rise 48% in May as U.S. Bank Repossessions Double
Bob Ivry
Bloomberg, June 13 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aA1ZBbzQ6gzA&
If foreclosure- and Reo- buyers are 60% of the market, then the whole trading up thing is dead and everyone is frozen in place. That’s sure how it feels.
During the 1980’s the UK suffered a 30% decline in house values – over 1m people in negative equity – took over 10 years for the housing mkt to turn positive. For some reason people today expect nightmares to last 30 seconds – they don’t, they won’t – several years of down to moderate at best (peaks and troughs) growth – the big ? for me is where all the money goes, it can’t sit still on the sidelines – does it drive comms up, perhaps a gold rush – I don’t think money cares it just needs to work for a living. Great site –
New rant from Mr. Mortgage w/accompanying video concentrating on how really bad things are in CA.
http://mrmortgage.ml-implode.com/2008/06/11/mr-mortgage-record-breaking-may-ca-foreclosure-report/
BR-
Theoretical exercise here…
Could you articulate an argument for a housing turnaround listing factors that will contribute to or be responsible for such a turnaround?
I’m asking because I can’t think of one…
I certainly can’t hypothesize a scenario where any stabilization/ rebound happens anytime soon…
@singer
The only thing i can think of is cheap energy…
The housing market better rebound before rates start going up….LOL…..
On an aside, the ARM reset problem is currently on hold due to low rates….peoples’ ARMs are actually resetting lower currently, which is helping to stem some of the bleeding….which is why the Fed is in a tight spot. The patient known as the housing market is on life support…do you keep rates low and hope that the patient recovers, or do you start to raise rates and put the market out of its misery, in the hope that you can save the rest of the patients lined up in the hallways…
Oh, and Mr. Mortgage needs to drink a cup of coffee. Dude is way too mellow….
looking at the Mr Mortgage site..if the worst Calif discount at auction(number 4 on breakdown) were no more than 37%…and the average was 28% … thats actually not so bad …so what percent of total mortgages are in default? maybe the FED’s idea isn’t so dumb assuming at worst 2 years worth of inventory overhang…if the average value of all real estate assets is only affected 10% or less…
We are entering the steep part of the decline curve for foreclosures. I doubt we’ll get the level-out deflection before Q4, and more likely Q1 09, followed by a long, shallow decline into 2010. It’ll feel like a bottom a year from now, though it won’t be in reality for a year plus on that. . . . Now’s when you loose your lunch on the bottom-drop-out slide, though.
The only “good” scenerio would be enough wage inflation to make housing affordable at current prices.
I believe the bottom isn’t close until one of the major homebuilders goes the way of Bear Stearns. KBH or another highly leveraged builder would be my guess.
ps what would be much more worrisome is no sales at auction..no bids..and I disagree with the Mr mortgage notes at the end a little …so what that banks control the inventory ..and so what they sell X number of houses at discount …the market moved so far so fast..anyone who really believed those inflated values is somewhat naive..the market is clearing ..and that is good ..
Singer —
If I really wanted to pimp housing, I would seek to raise price inflation to 10% or so, while keeping Treasury yields artificially low at 4% (I don’t how ‘they’ do that, but it’s a cool trick, and it can be exploited to jack houses). I’m talkin’ heavy-duty negative real rates, which will make everything spiral up like mushrooms after a summer storm.
Three years of double-digit inflation would hike replacement costs by 30% or more, and suddenly half-million dollah houses are the norm.
Let’s face it — cut through all the Federal Reserve smoke blowing, and they have only one course of action: Bring Back The Bubble! In a Ponzi economy, if you don’t have one Bubble boiling on the stove, and another simmering on the back burner, you got nothin’. This may sound jokey, but I’m entirely serious.
Over to you, Bubblemeister Ben. One percent or bust!
I’d want to see this map broken down by county.
Price inflation alone wouldn’t be enough to boost housing. You would also need either wage inflation so that people could afford the payments, or new and exciting mortgage products that artificially lowered the payments.
So Realtytrac used to be criticized for the way they tallied their stats. Have they corrected that problem? Are their statistics now considered to be somewhat accurate?
They used to count such that the same house would get counted again and again as it passed through each stage of the process–thus overstating the real foreclosure rate.
Wait until winter… I just got an oil delivery… 4.99 per gal…. the choices people will have to make: pay the mortgage or heat the house or put gas in the car or feed the family. it won’t be pretty.
dont take ma home, it’s all i got
It would be intereting to see this map combined with a map showing median income.
Its interesting that “poor” states like W. Virginia and Miss. have a low foreclosure rate while “rich” state like CA and AZ have a high forelcosure rate.
I guess it’s not all caused by poor people taking out mortgages they couldn’t afford.
“This is the highest monthly foreclosure rate since they began tracking foreclosures in January 2005.”
2005? That is a completely meaningless bit of information. Why include it? Its only 3 years. I find the rest interesting….
Yet the only debate I hear among the value managers on CNBC is whether it’s time to buy the financials NOW or wait until tangible book value goes below 1 and THEN pull the trigger.
Everyone who runs OPM seems to think this is a re-run of 1990 and they’re missing C at $9 on its way to $120 over the next decade.
Methinks they must be disabused of this notion before calling it a bottom.
Are there even 154,000 houses in Wyoming?
I live in Houston, and I’m a bit surprised by Texas. There has certainly been a slowdown, existing homes and new homes sit for a long time, but people are asking stupid prices for them. All the RE talk is that Houston is okay because of the oil & gas industry, so no one selling wants to acknowledge that they’re not gonna get top dollar anymore.
I live in Houston, and I’m a bit surprised by Texas. There has certainly been a slowdown, existing homes and new homes sit for a long time, but people are asking stupid prices for them. All the RE talk is that Houston is okay because of the oil & gas industry, so no one selling wants to acknowledge that they’re not gonna get top dollar anymore.
Definitely a reflection of the economy as a whole. Not only housing prices drop but the collapse of the credit markets. Eventually we will ride out this problem, but if you have cash now there are some bargains to be had.
http://gewdir.com the bad credit loan blog
Our mississippi market has slowed down but it is nothing like the markets in flordia, california and michigan. Hopefully things will get back to normal within the next year