Foreclosures, Loan Delinquencies Impact the Housing Market
For many homeowners helplessly watching their property values take nose dives and housing experts observing the market like hawks, the question on most peoples' minds these days is: Are we close to the bottom of this housing mess yet?
Many industry experts are saying the minute a significant amount of loan delinquency and foreclosure rates begin to head down, the fat lady will get her cue. Until then, it's too early to predict how far down the road we actually are. Jay Brinkmann, Mortgage Bankers Association's Chief Economist and Senior Vice President for Research and Economics, says homeowners and real estate professionals should stay focus on the conditions of local markets, rather then to pay attention to the national stats floating around the news.
National is not local
'The simple answer is that the idea of a national bottom is somewhat meaningless,' said Brinkmann in a Sept. 5 press release. 'Real estate markets are local and some markets are already improving.'
Brinkmann says, for example, even Michigan, one of the worst hit markets in the country, has now gone three quarters with little to no increase in its foreclosure rate. Likewise, Massachusetts showed a very large drop in foreclosure starts, perhaps signaling a bottom. Because of the sheer size of places like California and Florida, an improvement in the national numbers, whether delinquencies, home prices or any other measure, is unlikely until we see some turnaround in those two states.
The national foreclosure numbers continue to be driven by the hardest hit states like Californian and Florida, where the problem is getting much worse. The increases in foreclosures in California and Florida overwhelmed improvements in states like Texas, Massachusetts and Maryland. California and Florida alone accounted for 39 percent of all of the foreclosures started in the country during the second quarter and 73 percent of the increase in foreclosures between the first and second quarters, according to MBA's data.
Only eight states had rates of foreclosure starts that were above the national average: Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana and Ohio. The remaining 42 states plus the District of Columbia were below the national average.
RealtyTrac report
RealtyTrac's August 2008 U.S. Foreclosure Market Report released Friday showed a 12 percent increase in foreclosures nationwide from the previous month and a 27 percent increase from August 2007. The report, which includes foreclosure filings, default notices, auction sale notices and bank repossessions, also identified one in every 416 U.S. households that received a foreclosure filing during the month.
Metro areas dominating foreclosure rates
California cities accounted for eight of the top 10 metro foreclosure rates out of the 230 metro areas tracked in the August report. Stockton was No. 1, with one in every 50 households receiving a foreclosure filing during the month, followed by Merced, Modesto, Vallejo-Fairfield and Riverside-San Bernardino in the No. 2 to 5 spots, respectively. Other California cities in the top 10 were Bakersfield, Salinas-Monterey and Sacramento in the No. 8 to 10 spots.
The Cape Coral-Fort Myers, FL, metro area dropped from the top spot from the July rankings to No. 6 in August thanks in part to a 3 percent dip in foreclosure activity. One in every 66 Cape Coral-Fort Myers households received a foreclosure filing in August, more than six times the national average.
Las Vegas registered the seventh highest metro foreclosure rate in August, with one in every 75 households receiving a foreclosure filing during the month. The metro area's foreclosure activity was up nearly 14 percent from the previous month and 83 percent from August 2007.
While it can be awfully frustrating right now if you're trying to sell your home and you're living in struggling states like California, Florida or Las Vegas, but there's nothing much the average homeowner or Realtor can do to make this market speed up its recovery. It's a matter of waiting out a storm that was way overdue. Home sellers need to keep up with local market conditions and be realistic when pricing their property. The days of making 30 percent or more on your home is long gone. This doesn't mean it's impossible to sell your property under these strained conditions, it just means it's going to take a little more practical planning and, most of all, patience.
Interested in buying a foreclosed property? HomeFinder.com's Foreclosure Guide is packed with detailed advice that will guide you through the entire process. And learn more about your new community on our Snapshot pages.
Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@HomeFinder.com.
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