U.S. Foreclosures Increase 87 Percent as Prices Fall

[Purveyor]

Source: Bloomberg

July 12 (Bloomberg) -- Mortgage foreclosures in the U.S. climbed 87 percent last month as falling home prices and stricter loan standards made it harder for borrowers to make payments.

There were 164,644 loan default notices, scheduled auctions and bank repossessions in June, led by filings in California and Florida, where home prices have plummeted, and Ohio and Michigan, where automotive-related businesses have fired workers. Those four states accounted for half the national total, RealtyTrac, a seller of foreclosure data, said today in a statement.

Foreclosures are soaring amid a glut of properties and as interest rates close to an 11-month high make it more difficult for borrowers to refinance. Defaults may rise further as owners with adjustable rates see their payments soar. The share of people taking out all types of adjustable-rate home loans averaged 29 percent during the past three years, compared with the 17 percent average of the prior three years, according to Freddie Mac data.

--
Homeowners are losing their property as the National Association of Realtors is forecasting the housing slump will persist into next year as builders curtail production. The group yesterday reduced its sales forecast for the seventh consecutive month and said existing home sales will fall 5.6 percent.



Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=afjq9WCz.Zy8&refer=us

[snappyturtle]

1. K&R This is another serious problem....I'm about to turn 60 and

never have I seen anything like this. The worst for me was in the early 80's when interest rates were outlandish....14-17 percent, if my memory serves me right. We were trying to sell (corporate move--not by choice) our home and our 14.5% assumable mortgage was a selling point! But, THIS....foreclosure is the absolute worst. I'm afraid of what's going to happen to these families being foreclosed.

[NewYorkerfromMass]

6. Just look at the personal savings rate

negative for the first time since the Depression (as of last year). So, no wonder you have never seen anything like this.
The reasons for the negative personal savings rate (translation: people are spending more than they earn), are many, not the least of which is these mortgages they really can't afford.

[snappyturtle]

14. Top that with earnings that haven't come close to keeping

pace with living expenses and predatory lenders and we have a delicious kettle of soup! It's a mess.

[Robbien]

2. Not a problem for the luxury real estate

Given that the real estate market is supposed to be in free fall, some strange things have been happening recently in Mill Valley.

It is one of the expensive suburbs of San Francisco just over the Golden Gate Bridge, and much of the housing market there seems to be doing just fine. One three-bedroom house sold for US$1.4 million last month without ever being officially put on the market. The seller accepted a pre-emptive bid - US$20,000 above the asking price - from somebody who had heard that the house was about to be listed for sale.

‘The homes that are having a hard time selling are the average-priced homes,’ said Vanessa Justice, a real estate agent with Pacific Union GMAC in the Bay Area, where the median house price is about US$750,000. For upper-end homes, she said, ‘it’s actually pretty crazy right now’.

http://lushhome.wordpress.com/2007/07/12/us-high-end-property-still-going-strong/

Two different worlds.

[Gregorian]

3. Those with the cash are still buying.

My prediction is this is going to be a widening of the wealth gap.

I'm one of those with the cash. I'm sitting here stunned by what I'm seeing. Prices even I can't touch. I'm homeless with king's ransom in the bank. It's pathetic. All while those who don't have the means are losing everything they have.



I don't see cheap housing in the future. Maybe this spells the end of ownership for those with less. I think that's it. It means the wealthy will own everything, and the poorer will just rent from them. I hate this.

[diamidue]

9. .."I don't see cheap housing in the future".

I don't know. With the current glut of houses now on the market, the increasing number of houses still headed for foreclosure, the number of homes currently being built, and the number of homeowners who want to sell, but have been holding off, I can't see these high prices holding. I see prices plunging. But I also fear that the economic repercussions of the falling housing market will leave many people unemployed, in deep debt, or otherwise unable to buy a home - even at lowered prices. And I see houses in less desirable neighborhoods sitting empty and decaying.

Check out what is happening to some of the houses in the Sacramento area:
http://flippersintrouble.blogspot.com/

[Gregorian]

12. Oh! Thanks for that link.

Very interesting. I haven't seen that yet. But I'm looking at coastal property. With a marine influence, the prices are still high. I think you're right. Even those are going to start dropping.

When I posted my previous comments, I actually went against what my gut feeling says. I honestly believe prices will plummet. But I think that from past history and where we are right now, it's hard to believe that will be the case. Plus, some markets will not be affected. And I speak for myself when I say that. If I found 300 acres with a river and privacy on the coast, I'd drop my money on it right now.

There are differing reasons for buying and for selling. I've talked to sellers who will rent before losing. But who knows where this will all lead.

I think I'll be patient and just wait. It's hard to do as I sit here with all of my belongings in storage. And I do mean belongings. I have a crane in storage. Try finding a place for tractors and cranes while waiting. Argh.

So the Central valley is crumbling. Thanks for that link. It is very telling. My guess is they were within commuting distance, bla, bla ,bla. They extended themselves in every way possible.

[kineneb]

38. damned bunch of McMansions!

some of those places are huge! I sure would not want to buy them, even if they were much cheaper. And most of them are in bedroom communities. Talk about being overextended.

[sandnsea]

4. Explains my market

My sil is a contractor and upscale home construction in my retirement town is still moving ahead. It's the 1960's 3 br ranch homes that aren't moving at all. The house I'm in has been on the market 4 months and not one person has come to look at it. It's too expensive for working families and not desirable for retirees. It needs to come down another $30,000 before I buy it. This is definitely an indication of how wide the income disparity has become. Another comical thing, the low income loans go to median income people. You can't qualify to buy most homes with a low income. It's wild.

[Lasher]

5. Exactly right.

Those tax cuts for rich folks were supposed to trickle on everybody, remember? Well I guess they do need to hire more servants for their multiple mansions.

[Socal31]

15. Sorry folks,

but unless you are in the mortgage industry or understand what is happening here, I wouldnt start trying to pass blame around for this.

It has absolutely nothing to do with repubs/taxcuts/bush, or any of that. It invovles an influx of Chinese money buying up mortage backed securites on the secondary mortagage market, causing lenders to loosen credit standards, allowing anyone who can walk to buy a home. (thats what just gave us our housing boom). Now that money is drying up, credit is tightening, people cant refinance to get out of bad loans. People with questionable credit can no longer purchase homes. Too much supply, not enough demand.

There it is in a nut-shell.

[trudyco]

19. Do tell more

What is mortgage backed securities? What is the secondary mortgage market?
Why is the money drying up? The Chinese are still flush, aren't they? Is this a way for the chinese to manipulate the US economy?
I thought increased interest rates were a direct result of a stupid war which I do blame Bushco repubs for.

[Lasher]

20. I'm pretty dumb but I want to learn too.

What are variable rate mortgages? Is that better than a fixed rate loan? Do sub-prime mortgages have anything to do with today's forclosures?

[hack89]

21. Some basic answers

can be found here:

http://en.wikipedia.org/wiki/Mortgage-backed_security

http://www.answers.com/topic/secondary-mortgage-market?cat=biz-fin


While I don't know what's going on with the Chinese, considering interest rates are still at historical lows and have been for quite a while, I don't think the war has very much of an effect on interest rates.

[1932]

23. Two Americas. A lot of people at the bottom are doing so poorly BECAUSE and SO THAT people on top

can do so well.

I don't know why people think this is such a surprise.

A lot of the people buying those homes in Marin probably made a lot of money from banks which made so much money getting people into outrageous mortgages and incredible credit card debt.

[redqueen]

7. Which asshat said last week that the housing market had hit bottom?

:rofl:

I can't help but laugh...

[1776Forever]

8. U.S. foreclosure filings surged 90 percent in May 2007

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7YkV3.7BueQ&refer=home

U.S. Mortgage Foreclosure Filings Rise 90% in May (Update4)

By Kathleen M. Howley

June 12 (Bloomberg) -- U.S. foreclosure filings surged 90 percent in May from a year earlier as more homeowners fell behind on their monthly mortgage payments, RealtyTrac Inc. said.

There were 176,137 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio, the Irvine, California-based seller of foreclosure data said in a report today. The median price for a U.S. home slid 1.8 percent the first three months of 2007 as the housing slump entered its second year, according to the National Association of Realtors. The filings rose 19 percent from April.

_________________________________________________________________________________________________

Just the start of the surge on the Middle Class quality of life! We are all under a cloud of rich and poor values that are in danger from the North American Union - check it out.

[Xithras]

10. I live at ground zero for this. Expensive properties are not exempt.

Stanislaus County California, my home county (about 45 minutes from the SF Bay Area), ranks #4 in the nation for defaults, and there was a big article in the paper about this today. Last month alone there were 203 forclosed homes auctioned off. If 203 doesn't sound like much, keep in mind that the normal number is 15. If you tack in the two neighboring counties (neither of which is in the Bay Area), we're #1 for forclosures nationally...there have been over 2500 homes forclosed on since the beginning of the year. Statewide, the number is right at 30,000 homes since January 1...12 BILLION dollars worth of houses. I can throw a rock across the river from my backyard and have it land in San Joaquin county. There, 1 out of every 100 homes is in default. In my county, the number is 1 out of every 131. In the next county down, it's 1 out of every 121. Statewide it's 1 out of every 315. Nationwide it's 1 out of every 704.

Our property values have plummeted as a result. I originally paid a bit over $400k for my home (Before the boom started), and at the peak of the market it was valued at $1.3 million (a couple of acres right on the river...it's a valuable lot). One of my neighbors, who has a BIGGER lot and a NEWER home than I do, has been trying to sell his home for nearly a year now. He started at $1.5 million, and is now down to $800,000, the price he originally bought it for. No takers. His last realtor dropped him when he refused to lower his asking price to $699k, and his current realtor is telling him that at $800k he'll be sitting on it a while. I was told several months ago that my property is probably worth about $600k today, but if he's having those kinds of problems I'm doubting that even THAT is accurate. I've already been told that my 20+ year old house is essentially a "pushover" to high end buyers, and that it's really only the land that gives it any value. If his 3 acre lot WITH a new home isn't moving at $800,000, I can only imagine what my "pushover" on 2.5 is worth.

Damned good thing I'm not planning on moving anywhere for the next decade.

[Eurobabe]

11. So, you know how to screw the rich bastards? Eliminate the home mortgage deduction

If no one can afford a house anymore, why not do what Germany has done? Take those tax dollars and use it for universal healthcare. That's right. The only way you can take a tax write off on a house over here is to have a rental property, no first home deductions.

It's a 3rd rail that no one dares to touch, but might be necessary to get a decent healthcare plan up and running.

[Socal31]

16. You dont realize what you are saying....

Middle class and lower class people still have homes. Its not just the rich. That was probably one of the more ignorant statements ive seen in a while.

The mortgage tax break helps self employed people (like myself) and everyone else too. Im in the mortage industry, and let me tell you, Ive sold loans to MANY people who arent "rich" or anywhere close.


And the only people with rental properties are the WELL OFF. So why give them the tax break? You condratict yourself.....

[NewYorkerfromMass]

17. Residents of rental properties are at both ends

Geez. That's ignorant in itself. I'd say most renters are poor in fact. You don't live in a big city do ya?

[loser_user]

18. I think they meant

The owners of the rental property are well off, not the renters themselves.

[1932]

24. The mortage tax deduction is a taxpayer subsidy to higher home prices which

ultimately increases profits for the people who lend you money to buy your home -- the banks.

[Eurobabe]

25. read the first few words in my post: if no one can afford to buy homes

or own a home anymore. Anyone but the rich. What I am implying is a total crash.

Your slip is showing. I used to sell new construction, BTW. Not anymore.

[bleedingheart]

22. It wouldn't hurt the rich at all...it would hurt the middle class

the segment of the middle class that would hurt.

1. Folks who overbuy in cheaper markets
2. Folks who buy in overpriced markets (California for instance where folks buy small ranch homes for $800K that would only be worth $120K in Pennsylvania)..


The truly rich rarely have mortgages, they buy property outright....

[eridani]

26. Not at all. We are ALREADY paying for universal health care

We just aren't GETTING it. We only need to redirect what we are spending now to actual care.

[w8liftinglady]

13. my house was foreclosed after my divorce.it sucks.

[laststeamtrain]

27. U.S. Foreclosure Filings Jump to Record in First Half

Source: Bloomberg

U.S. Foreclosure Filings Jump to Record in First Half (Update3)

By Dan Levy and Brian Louis

uly 12 (Bloomberg) -- Mortgage foreclosures in the U.S. jumped to a record in the first half as rising interest rates and falling home prices battered homeowners.

Almost 926,000 foreclosure notices were filed, 56 percent more than a year earlier and the most since Irvine, California- based RealtyTrac started tracking the data in 2005. Foreclosures were the highest last month in California and Florida, where some home prices have fallen as much as 25 percent, and Ohio and Michigan, where the automotive industry fired more than 50,000 people in the past 10 years.

The jump in 30-year mortgage rates by more than a half a percentage point since May is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. Foreclosures also are increasing as the supply of unsold homes hit a record 4.43 million in May, according to the National Association of Realtors.

<snip>

In June, defaults surged 87 percent to 164,644 from a year ago, said RealtyTrac, a seller of foreclosure data, in the statement today. Last month's total was 7 percent lower than in May. California, Florida, Ohio and Michigan accounted for half the national total in June.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=afjq9WCz.Zy8&refer=home

[MadMaddie]

28. Can some financial person explain this to me....

The housing market is not doing well...Other areas of the economy are not doing well...but the stock market went up what 300% today or something?

Maybe they have nothing to do with each other but it doesn't make sense to me...

[papau]

29. Home sales are at the 5th highest level in history, price cut backs 6% tp 8%

from Dec 2005 but are zero decreases in many areas and in various areas rising.

the slow down will take 0.5% off of the growth rate - but will not put us in a recession (although I would not be surprised by near zero growth for next 3 quarters in real terms with reported growth at 1.5% because of the way GDP now measures the increase in export/import trade as growth

[MadMaddie]

30. Thanks for the explanation...

:hi:

[WCGreen]

31. The stock market runs like it does because people are chasing

the margins...

The stocks run up, everyone gets excited and individuals start buying stocks like crazy then the pro's take their profits and the market slows down or drops back...

But one of the main reasons they may have shot up is because WalMart released better than expected sales for the July Fourth holiday and that signals to many that the consumer is coming out of their doldrums and are more confident in the future...

I take it as more and more people are forced to shop there because they have maxed out their credit cards...

But hey, I'm a pessimist right now...

[1932]

32. There aren't enough investment games to play. I think money is coming out of real estate

and going into the stock market.

[Double T]

33. Significant numbers of foreclosures will continue for the foreseeable future...........

while home buyers will have a tougher time as credit tightens. wall street operates on whims, fabrications, consolidations, propaganda and delusion. The real economy sucks while the top 10% are getting filthy rich at everyone else's expense.

[lovuian]

34. The Greenspan cheap money party is OVER

and now the crunch and pain

[Double T]

35. And Bernanke has blinders on and has switched the controls over to autopilot,.............

the mountain is straight ahead.

[David__77]

36. It's going to get worse.

The credit bubble was unprecedented. Millions are at serious risk. Prices will fall further. In my area, Sacramento, there's already been a double-digit price decline in nominal terms. The mortgage-to-income ratio is still far out of its historical band of operation.

[Javaman]

37. Took the words right out of my mouth. That's the other shoe waiting to drop..

the credit bubble. That will make the housing bubble look like a cake walk.

[kineneb]

39. whole bunch of shoes waiting to drop

-what will happen to foreign investments in US real estate?? will the properties be dumped, or?
-consumers unable to purchase goods, loss of employment due to lack of demand (economic death spiral)
---and---
-loss of value of dollar to other currencies
-too much liquidity (paper) in circulation with little to back it up (the infamous M3 which is no longer reported)
-oil-producing countries shifting out of dollar to mixed basket of currencies

Weather report: overcast with possibility of heavy shoe showers.