Foreclosures Have Peaked and It's Time To Buy? Not So Fast

There were some confusing headlines about foreclosures yesterday. This AP report shows foreclosure filings in the U.S. up 68 percent last month, while BusinessWeek says they're down 10 percent. Rick Sharga of RealityTrac explains that both are correct.

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This is yet another example of how statistics can be deceiving (for another example have a look at this report on new home prices). Anyone considering a home purchase today should understand that the ten percent drop from October to November is much less significant than the 68 percent increase from November 2006 to November of 2007.

Month-to-month data is almost always useless due to its volatility - if you get a few months of consistent data in a row, that might constitute a meaningful trend, but otherwise it is mostly noise.

So, in this case, if your real estate agent calls you and tells you that foreclosures have peaked and that you need to buy now, well, just tell them to "bug off".

A total of 201,950 foreclosure filings were reported in November as compared to 120,334 a year ago - this trend is not your friend if you are looking for stabilization in the housing market.

Once again, Nevada, Florida and Ohio lead the nation in highest foreclosure filing rates while California claims the highest number of foreclosure filings - the number of foreclosures in the Golden State has more than doubled in the last year to 39,992 last month.

Comments

[the gugg]

I take exception to your comment "Bug Off" I'm a informed real estate agent that never pushed anyone in any direction. I find experts/bloggers are quick to point fingers of blame. There is plenty of blame to go around with this mess, created by good old fashion greed.

We have become a culture of the "quick buck" and this time it was real estate. Many buyers got caught in the late stage boom and discovered that real estate is not as liquid as tech stocks.

I don't know if Tim has profited from real estate, but my gut tells me that he has. Tim you seem draw pleasure from the bad news. I believe we have a cultural problem that has led to the "I want to be like Paris Hilton" syndrome.

Don't blame the Mortgage Brokers, Real Estate Agents, Freddie, Fannie, FHLBB, FDIC, FHA or any other conduit. This is clearly an example of GREED gone bad for the uninformed. In a way this is how the American dream succeeds and fails. In the end we will all pay the price for our greed, it's nature's way.....

P.S. Keep up the good work.

[DuffBeer]

Tim, I to am a Realtor been doing for over 22 yrs so I have seen a thing or two.
I believe the big US economy has used different sectors to keep it going. The last one was real estate and that just completely blew up. The most recent post shows no responsibility sure they are many many to blame but to point fingers and continue to say not me it is you is what is wrong in the good old USA. I guess I am just plain old fashion or was it a good bringing up !!!!
I saw this coming with the 1st offer I received 4 yrs ago that stated this very crazy financing. Absolutely no risk at all to the buyer for they had absolutely no $$$$ in it .
Now that is some responsibility.
The agent above is entitled to his or her opinion. You just watch how many of them will shortly be writing a new resume.
I am thankful that I have always studied the stock market and not real estate.
Oh yes ,I have done pretty well I am not one of those mega brokers no I just gave good old fashion service.
Merry Christmas, Please remember the TROOPS for all that
they do,they will appreciate it.
I know I was one of them.
Cheers, DuffBeer

[WAKEUP]

Oh, so real estate agents are blameless? Please. Maybe I'll wait for a real estate agent to reply to this article, admitting that they steered customers into not-so-good-deals, in order for the agent to get higher commissions. What's that, you say? I'll be ten thousand years old, before any real estate agent admits any selfish involvement in the market, you say?

[NoFate]

Wow, looks like Tim hit a nerve here! All he really wrote was that if a RE Agent wants to sell you some property tell them to try again later...

But lets get real guys! I guess it depends on the size of the bubble in your market, but in a bubble area you are at least complicit in seeing some questionable stuff going on!
- Appraisals a teensy bit inflated?
- No doc loans? - 2% teaser ARMs being sold to illegal immigrant share croppers?
- Any of this ring a bell?

Maybe not ...but I am guessing many looked the other way because the money was rolling in ...lots of money.

So maybe YOU are a fine upstanding ethical professional business person ...but that hardly means all your fellow agents are.

And as a final note ...hire a REAL economist for a change at NAR! The last two bozos couldn't extrapolate their way out of a wet paper bag. I mean really ...my 6 year old daughter gives more accurate predictions!

[RLLD]

Real Estate Agents are as culpable in this mess as any other entity, attempts to absolve themselves through some justification are pathetic. The role of the RE was central to the success of this fraud as they were the facilitator between the "useful idiots" (buyers and sellers) and those that sought to exploit the lack of financial sophistication of those useful idiots.

Without the RE helping to administer and justify the fraudulent prices and loan vehicles this bubble and its resulting mess is not possible.

I find those who would absolve themselves of culpability when their role was so integral to be beyond pathric, its repugnant.

[NOT Shirleyeither]

the reason FCs are down m2m while up y2y is that the selling season winds down during the fall and winter months.

so for 2/28's written two years ago, there were likely more closed in oct than nov.

realtors(R) know this, but in their usual lyin' ways they spin it the other way.

[bought-high]

Blaming real estate agents is foolish - and I am not an agent. People need to take accountability for their actions. I know I bought high and I know that my agent / broker were just in it for the money. But so what - I made the first and final decision.

Stop letting the lawyers make everyone want to blame someone and look for a handout.

[blamethebigguy]

Can't blame agents. They're job is to make money. Just like mine is and sharks are carnivores. Idiots who bought into ridiculous loan products -- they're to blame, but their being stuck with a lone 150% of the value of their property will be their just dessert. The blame is on Greenspan for keeping interest rates low and the blame is on the entire chain of the mortgage industry/community. This includes the loan origniators, the repurchasers of the loan, the creators of the SIVs and the idiots who purchased these SIVs --- but those idiots, at Citi and the other houses - should have known better. Well done on getting out Goldman Sachs. 3 cheers. And no, realtors should not be offended because someone advises their client base that this is not a good time to buy. Duh.

[blamethebigguy]

Can't blame agents. Their job is to make money. Just like mine is and sharks are carnivores. Idiots who bought into ridiculous loan products -- they're to blame, but their being stuck with a lone 150% of the value of their property will be their just dessert. The blame is on Greenspan for keeping interest rates low and the blame is on the entire chain of the mortgage industry/community. This includes the loan origniators, the repurchasers of the loan, the creators of the SIVs and the idiots who purchased these SIVs --- but those idiots, at Citi and the other houses - should have known better. Well done on getting out Goldman Sachs. 3 cheers. And no, realtors should not be offended because someone advises their client base that this is not a good time to buy. Duh.

[recentBuyer..]

Hey people.. I think its the buyers fault for the majority of this mess.. We buyers want to have "realistic" house payments.. so to do this we are looking for the LOWEST possible payment we can get.. the only problem with this mess is we let Mortage brokers tell us that we can have our "cake" and eat it too.. all at a really low rate.. ---for now-- then five to ten years later you will have to pay more since its an Adjustable rate loan.. Yeah.. I was smoozed into that one 10 years ago.. I had the house for 4 years then all of a sudden my payment went thru the roof.. I was told by the Broker "oh by that time you will be making more money at work..blah blah.." Long story short I fell for it.. and before I knew it I put that thing up for sale.. took me 10 years to buy again.. and this time that Cat will be """ FIXED"""... I feel that many people fell into the trap of "ARM"S.. and are trying to get out.. or at least refinance as fast as they can or face forclosure.. the only problem is that wonderful house that used to cost you less now costs billions...

Yes it's us consumers problem.. for not getting a fixed rate to begin with.. even though its gonna cost like a "mother" to have it.. but sometimes ya have to do what you got to.. I know Ive lived thru this mess... and dont have tons of cash with dust layin on it to throw towards a new home..

Im one of the lucky ones that found a great home for alot less. (repo) almost 1/2 the price of just a town home down the street ($350-475K)
(glorified apartment complex) is what that is.. I mean how do you justify having no side windows on the thing.. and only a brick wall to seperate you from your neighbor.?? and NO yard..??? Hello.. Ill take my 4 bedroom home with 20 to 30 foot space between houses any day over that..

I like the idea of space between us in case there is a fire.. unlike a neighborhood that just went up in Atlanta (over 8 family's are now homeless) all because they jam those mansions that should be on 5 acres of land. They put 4 houses so close to each other all you have to do to teleconference your neighbor is stand at the window.. its that bad.. all at the price of $800K+

I think many people think they need to live like all the other hollywood crowd that they see on tv.. but that Mc Donalds just aint gonna pay ya enough for it.. so we get suckerd into the lowest payment plan we can find.. its so sad... that we have Ceo's that rape the company then it dies and they go to another to do the same thing.. its horrible what "legalized" theft that goes on.. And dont get me started on the Lottery...

Yall have a Merry Christmas and New Year!

[carlivar]

I have, quite simply, never met a realtor that hasn't told me it's a good time to buy for one reason or another. Including now.

Realtors may have good intentions but in my experience they are also delusional. It is understandable given the propaganda that NAR constantly releases.

[GaryD]

You can't blame real estate agents; they're just pawns. Not exactly sophisticated, they just push whatever they can to make a buck. Most of them seem to believe that real estate only goes up. It's the people who came up with the garbage loans, the people who insured them, the GSEs like Fannie Mae, and the Federal Reserve system, that are responsible for this mess.

[Thiru]

I am not an agent. I believe they are just pawns in the game. The blame should be put on the top like Fed who have been warned but took no action. See this article business.smh.com.au/fe...

[Malkiel]

I'm really surprised that so few people are noticing the flaw in picking the bottom of the market when it comes to housing--if you're in the market for a house, the bottom of the market has come when the house you want to buy (all other things being equal, like house is sound and well appointed and not over/under sized for neighborhood) is between 2.5 and 4 times your gross annual income. Any house within that range has reverted to the mean of affordability and is no longer a "bubble" property. It doesn't really matter whether that house loses a little more valued during the downturn because it will probably recover it later, since it isn't drastically overpriced to begin with; and if your income is a great deal more than the median, and you've bought a property more expensive than the median but still within your own income range, it still isn't a "bubble" property, it's just a premium property that will take longer to sell later. The buyer's own income is the yardstick they should be using to make their decision, not some bottom-feeding philosophy about the market as a whole...