Riddle me this housing bulls (what’s left of you). How can housing possibly be anywhere near a bottom when foreclosures continue to set one new record after another?
The short answer it can’t be, so the bottom in housing then is still nowhere in sight—no matter what Lawrence Yun says.
Here by the way is the latest ugly news on foreclosures courtesy of Diana Olick.
From CBNC entitled: Home Foreclosures: Crisis Is Only Getting Deeper
“It’s another record in the real estate market, and it’s not a good one. RealtyTrac, the online foreclosure sale site, which has also been tracking foreclosure activity since the beginning of 2005, reports the single largest one-month volume of foreclosure activity it’s ever seen.
Again, they’ve only been doing this for three years, but you get the idea.
Foreclosure activity in April—that’s default notices, auction sale notices and bank repossessions (so yes there can be more than one hit on the property, but we look at the total percentage increases)—was reported on 243,353 properties. That’s a 65% increase from April of 2007.
Alright, so what about all the reports that borrowers are being helped, and all those programs to find and refi borrowers, and what about the word from some other sources that foreclosure numbers are actually dipping?
Well here’s a disconcerting answer: Apparently the system, that is whatever court or clerk or local bureaucratic office is stuck with recording all this stuff, is stressed. In Ohio, for example, I’m being told that it can take two to six months to get your filings in the system.
“In states like Michigan, we’re hearing from some of the trustees who actually do the foreclosures that the lenders have asked them to slow down because they don’t want to process any more into a market that won’t absorb the properties back through sales,” says Rick Sharga of RealtyTrac.
In Florida, a St. Lucie County court actually added a night shift to handle the massive backlog of foreclosure filings. The clerk of the courts was quoted as saying the caseload has become, “just horrendous.” The court used to handle about forty filings per month.
In January they were tracking 715 foreclosure filings. Some are reporting lower numbers because the numbers simply can’t get into the system.
The folks at RealtyTrac, and granted these folks list foreclosed properties for a fee, say they don’t believe we’ll see the numbers start to slow until the second quarter of 2009. May and June of this year, according to banking estimates, are supposed to be the peak of adjustable rate mortgage resets from subprime loans initiated in 2006. (Emphasis mine)
Lower interest rates on Libor (one of the most common of benchmark interest rate indexes used to make adjustments to adjustable rate mortgages) and other indices that correlate to ARM loans could help, as could continued efforts from FHA and lenders. But the sheer volume, it appears will remain high for now.
All those foreclosed homes on the market will continue to push inventories up and push prices down in neighborhoods across the country. “
So many foreclosures… so few court clerks.
Home prices, by the way, continue to fall. In fact, according to the National Association of Realtors yesterday the median price for a single-family home fell 7.7 percent in the first quarter.
The median was $196,300 for the quarter, down from $212,600 a year ago, the largest decline in records going back to 1979.
All of which will result in more foreclosures….which will lead to higher inventories….which will lead to lower prices….which will lead once again to more foreclosures.
It’s a neat but vicious cycle.