RealtyTrac: 25% Of 2008 Home Sales Will Be Foreclosures [Housing Tracker]

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Quote of the Day

"We can't afford to compete against foreclosures at 40% to 50% off." – Richard Dugas, CEO of Pulte Homes, who acknowledged that even if foreclosures are localized—with California, Florida, Arizona and Nevada suffering the most, 40%-50% price reductions are hard to compete with. (Builder Online, Sept. 24)

Foreclosure Data

Foreclosure Cases Put On Lee County Courts' Fast Track. Florida: “Foreclosures in legal limbo will soon start getting through the Lee County courts faster, putting homes back in the real estate market. The Clerk of Court office - inundated with record amounts of foreclosures - will allot blocks of time in court exclusively for foreclosures, will hire part-time judges to deal only with foreclosures and will start working online. Clerk of Court Charlie Green has seen a 1,769% increase in the foreclosure cases his office must handle over the past two years. Of the 32,983 foreclosures filed over three years, more than 22,000 cases are still open, which means only about 35% have been processed.” (News Press, Sept. 25) 

The Top 10 Foreclosure States (as of August). “Foreclosure filings—default notices, auction sale notices and bank repossessions—were reported on 303,879 U.S. properties during the month, a 12% increase from the previous month and a 27% increase from August 2007. The report also shows one in every 416 U.S. households received a foreclosure filing during the month. Which states have the highest foreclosure rates? Nevada: 1 in 91 homes, California: 1 in 130 homes, Arizona: 1 in 182 homes, Florida: 1 in 194 homes, Michigan: 1 in 332 homes, Georgia: 1 in 422 homes, Ohio: 1 in 444 homes, Colorado: 1 in 452 homes, Illinois: 1 in 483 homes, Indiana: 1 in 522 homes.” (US News & World Report, Sept. 24) 

Foreclosures Peaked? “We have a second wave of approximately $200 billion in resets that could hit… next year. These are on Alt-A mortgages and Option ARMs, taken out by investors and homeowners… Many will start to reset in 2009. This second wave is only about one third the size of the subprime... Still… the Alt-A and Option Arm mess, along with lingering problems from subprime mortgages, may be enough to keep foreclosures at current levels next year… RealtyTrac: This year 25% of all sales will be foreclosed home sales… Foreclosed homes sell at a 31% discount to today's prices, compared to 23% the previous year.” (Builder Online, Sept. 24) 

Foreclosure Not The End For Homeowners. Alabama: “Kenneth Lay, who represents [non-profit] Legal Services Alabama: “Alabama is actually lucky, though. For once, we’re not in the worst situation. We have averaged in foreclosure rates anywhere from 37th to 42nd, so we are much better off than the majority of the country. Georgia, for instance, is in the top five worst, because of the Atlanta area.” (Dothan Eagle, Sept. 24) 

Foreclosure Rates Up in Wichita Falls, But Nothing Like National Trends. Texas: “Consumer Credit Counseling Service: foreclosures have gone up in Wichita Falls, but only by about one per month higher compared to this time last year. Ralph Dunkelberg III Vice President Fidelity Bank: "We didn't do a lot of adjustable rate mortgage loans or a lot of loans with negative amortizations a lot of those loans nationwide were banking on a large appreciation in home value.” He says since January foreclosures have increased nationally by 27%, however the state of Texas actually had a decline in foreclosures of 18%.” (Texomas, Sept. 24)

Area Home Foreclosures Increase; Prices Follow.  Oklahoma: “Area home prices jumped by 1.62% during July 2008 compared to July 2007. The current median price of a home in Tulsa or BA is $140,000. First American CoreLogic: Foreclosure rates in Tulsa increased for the month of July over July 2007… The rate of foreclosures among outstanding mortgage loans was 1.44% for the month of July… compared to July of 2007 rate [of] 1.23%. The number of outstanding foreclosures in Tulsa - including new and existing filings - was 1,689… Locally, 3.2% of mortgage loans were 90 days or more delinquent for July 2008 compared to 2.76% for July 2007.” (Bixby Bulletin, Sept. 24)

Millions Spend Half Of Income On Housing.  “Traditionally, the government and most lenders consider a homeowner spending 30% or more of their income on housing costs to be financially burdened. Now almost 38% of American homeowners with a mortgage - 19 million of them… An estimated 10 million homeowners owe more on their mortgages than their homes are worth. Mortgage Bankers Association: More than 4 million homeowners were at least one month behind on their loans at the end of June, and almost 500,000 had started the foreclosure process… In San Francisco, more than one out of five homeowners with a mortgage spends half or more of their income on housing… [In the] Miami-Fort Lauderdale-Miami Beach metro area: 58% of homeowners spend 30% of their income on housing costs, and 29% spend half of their income or more on housing.” (AP via Big Builder Online, Sept. 23)

Obama Targets Hispanics in Nevada, Market Crisis `Ground Zero'.  “Nevada, which voted Republican in eight of the 10 last presidential elections, has had the highest U.S. home- foreclosure rate for the past 19 months. Tourism, the top industry, is in trouble, and gaming revenue has fallen for seven consecutive months. Unemployment is 6.6%, above the national average… Nevada’s Hispanic community, which has been particularly affected by the housing crisis; in Las Vegas alone, more than 25,000 homes owned by Hispanics have been foreclosed. Hispanics account for more than 25% of Nevadans, up from 20% in 2000.” (Bloomberg, Sept. 23)

                                                                       

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Comments

[sujo:]

a soliloquy by Polonius in Act I, Scene 3 of William Shakespeare's Hamlet. Polonius is giving advice to his son Laertes before Laertes heads back to school. Here is more of the quote.

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.

That's why I rent.

2008 Sep 25 10:28 AM

[billddrummer:]

I rent because I have lousy credit.

But as an aside, RealtyTrac's assertion that 25% of home sales will be foreclosures this year doesn't apply to the states in the top 5 (or 10) ranked states. In NV, foreclosure sales represent well over 50% of existing home sales, and a goodly number of new homes too, as lenders foreclose on developers during the course of a project. One such project included 128 lots and 7 uncompleted homes. An investor bought four of the uncompleted homes, and individual homeowners had to qualify for construction financing to buy the others, because the bank was not interested in completing them.

I realize that NV has a ways to go before things stabilize. Las Vegas proper seems to be at the bottom, but there are still many communities surrounding that city in distress. And here in the north, things aren't looking any better yet.

2008 Sep 25 11:29 AM

[ArizonaHome...:]

I own a home because I want a stable place to live. I know what it is like to move multiple times during my college and early career days. It is tiring to move every few years or more. My home is where I live. NOT A GET RICH QUICK SCAM TO "FLIP A HOUSE WITH NO MONEY DOWN".

"Affordable Housing Programs" like Wells Fargo's "Emerging Market Program" that targeted low income people with marginal credit were popular 3-4 years ago here to "promote home ownership". These programs were championed by minority groups and often the loan officers were spanish speaking. You could not get this loan if you made "too much money".

This is why we are in this housing market along with the greed of the wanna be home buyer trying to make millions by holding a home long enough for the next high bidder to come along.

For a snapshot of what is going on in my neighborhood, read on.

I bought a home in Maricopa, AZ for $77 a foot or $288,000 in 2004. I upgraded it to $97 a foot or $360,000. At peak 2 years ago it was valued at $144 a foot or $535,000... now the same home in foreclosure sold for $57 or $212,000. The builder is selling their spec homes for $89 a foot or $331,000. This is "ground zero" in Arizona.

Each day their are more people leaving their homes, but they are being replaced by "good neighbors" who are taking care of their properties.

2 of my neighbors evacuated their homes last week. 1 of them had a back yard full of tumble weeds and trash and rattle snakes. The other had a dirt back yard because they too could not afford landscaping for the 3 years they owned the home. 3 other homes on my street were in the same condition, early this year when their owners we foreclosed on.

Now, the new neighbors that bought the 3 other foreclosures on my street are great! They had to qualify for the loan normally. They are improving their property. I have better neighbors than the ones that left.

Bottom line, if you live in a neighborhood like ours; The new owners are better than the old ones. The renters and over extended buyers are the ones with the bad looking properties.

2008 Sep 26 10:36 AM