High levels of foreclosures are still spreading throughout the country, as Americans are continuing to have trouble paying their mortgages, flooding local real estate markets with discounted homes for sale. At the same time, the ongoing controversy surrounding foreclosure documentation threatens to drive home prices even lower.
The latest report from RealtyTrac found that compared with last year, foreclosure activity increased in 65 percent of major U.S. cities during the third quarter.
The highest foreclosure rates continued to be seen in the same cities which have been hit hard in recent months, such as Las Vegas and Cape Coral, Florida. But the largest increases were seen in areas that had been fairly stable. Foreclosure activity near Seattle increased by 71 percent compared to last year, while Chicago and Houston saw their foreclosure rates increase by 35 and 23 percent, respectively. The reasons behind those rising foreclosures continued to focus on jobs.
"The underlying problems that are causing homeowners to miss their mortgage payments – high unemployment, underemployment, toxic loans and negative equity – are continuing to plague most local housing markets," said James J. Saccacio, chief executive officer of RealtyTrac. "And these historically high foreclosure rates will continue until those problems are resolved."
And as those foreclosures rise, the continuing documentation controversy is still hanging like a dark cloud over the situation. Speaking before a congressional hearing on the matter, Phyllis R. Caldwell, chief of the homeownership preservation office at the Treasury Department, said that the situation may both hinder the foreclosure process and discourage buyers of those distressed homes for sale – which could continue to stall the housing market's recovery.
"Together, these two factors may exert downward pressure on overall housing prices both in the short and long run," she said.
Even before the effects of those delayed foreclosures are felt to a large degree, home prices are already sitting at extremely depressed levels. The latest S&P/Case-Shiller Home Price Index showed that home prices continued to deteriorate in August.
The report said that home prices in August were just 1.7 percent above August of last year – the smallest gap in year-over-year pricing since February. On a monthly basis, home prices dropped 0.2 percent in August compared with July.
Falling home prices also spread to more cities in August, as 12 of the 20 cities included in the index reported negative home price growth over the previous year – two more than were seen in July. Even markets where home prices have shown positive growth have seen that rate slow significantly. In July, home prices in San Francisco were 11.2 percent above 2009 levels. But in August, that difference had shrunk to 7.8 percent.
"A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows," says David M. Blitzer, chairman of the index committee at S&P. "The housing market appears to have stabilized at new lows. At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers' tax credits."
Regardless of the outcome of the foreclosure crisis, it will take a long time for homes for sale to make back all of equity that they have lost over the last few years. The Case-Shiller report says that home prices are currently at the same levels seen in late 2003, as the crisis has created seven lost years of home price growth.
i belive that if some real estates keep doing what was done to my husband and i on a foreclosure home then no people will not want to bother with these homes We put an offer in 2 times one cash the other a mortgage the first offer less than 24hrs. no but no counter (offer 60,000.00) 2nd. offer mortgage 65,000.00 7 days later oh the foreclosure company just pulled the house and put it up for auction (but what the real estate didnt know is that i came across the home on an old site brought back as a new listing new pictures that looked great ) see the real estate we belive never put in our offer he told the foreclosure (fanny mae) put it up for auction and by the way we found out not only did he work for a real estate company he also worked for the foreclosure company now he had us we had fallen in love with an old up north home maybe we would bid higher never we just have a sick feeling and very sad that we are not going to bid because we were almost screwed and the trust will never be there . Hey good luck hope you make lots of money off another american who is putting their neck out to try to do their part to help.