T Nation

Foreclosures on the Rise


#1

The economy is getting better, for who?

http://rismedia.com/index.php/article/articleview/14241/1/1/

Foreclosures Soar 63 Percent over Last Year

RISMEDIA, April 19, 2006?RealtyTrac(TM) (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its March 2006 U.S. Foreclosure Market Report, which shows 101,597 properties nationwide entered some stage of foreclosure in March, a 13 percent decrease from the previous month but a 63 percent increase from March 2005. The report shows a March national foreclosure rate of one new foreclosure for every 1,138 U.S. households.

RealtyTrac publishes the largest and most comprehensive national database of pre-foreclosure and foreclosure properties, with more than 600,000 properties from more than 2,500 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate, AOL Real Estate and Knight Ridder Online.

"After rising more than 20 percent during each of the first two months of the year, foreclosure numbers experienced a fairly sharp correction in March," said James J. Saccacio, chief executive officer of RealtyTrac. "We saw a similar drop in March of '05, followed by four consecutive months of increases. Many buyers and investors typically start looking for properties in the spring, and that could have provided distressed homeowners a better chance of selling their properties to avoid default or foreclosure."

Colorado posts nation's highest foreclosure rate
Colorado's foreclosure rate leapfrogged to highest among the states thanks to a 31 percent increase in new foreclosures from the previous month. The state reported 5,392 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 339 households -- more than three times the national average.

After spending the two previous months as highest in the nation, Georgia's foreclosure rate dropped to second highest behind Colorado thanks in part to new foreclosures decreasing 19 percent from the previous month. The state reported a total of 7,656 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 404 households and a 77 percent year-over-year increase.
With a total of 4,933 properties entering some stage of foreclosure in March, Indiana's foreclosure rate -- one new foreclosure for every 512 households -- ranked among the nation's five highest for the third month in a row despite a 17 percent decrease from the previous month.

Utah foreclosures increased 21 percent from the previous month and replaced Ohio, where new foreclosures dropped 52 percent, among the states with the five highest foreclosure rates. Utah reported a total of 1,437 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 535 households and a 32 percent year-over-year increase.

Michigan's foreclosure rate dropped from second to fifth place among the top state foreclosure rates thanks to a 25 percent decrease in new foreclosures from the previous month. The state reported 7,727 properties entering some stage of foreclosure in March, a foreclosure rate of one new foreclosure for every 547 households and more than three times the number reported in March 2005.

States with most new foreclosures
Texas documented the most new foreclosures of any state for the fourth month in a row even though foreclosures there decreased for the second consecutive month. The state reported a total of 11,951 properties entering some stage of foreclosure, a foreclosure rate of one new foreclosure for every 674 households -- 1.7 times the national average.

California reported 11,073 properties entering some stage of foreclosure in March, the second most of any state, and the state's foreclosure rate registered slightly above the national average thanks to a 22 percent increase from the previous month.

Florida foreclosures decreased 7 percent from the previous month and 12 percent from March 2005, but the state still reported 9,283 properties entering some stage of foreclosure in March -- the third most of any state and a foreclosure rate 1.5 times the national average.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.


#2

How many of these were the result of interest-only mortgages and people buying homes as asset-speculation?

You need more facts, AlDurr.


#3

Home sales are up. It only makes sense that foreclosures are up.

Have you seen the size and prices of the new houses?

I wonder how anyone can afford them.

Is it the cheap or expensive houses that are being foreclosed?


#4

Those questions are irrelevant.


#5

Why do I need more facts when these are your questions? There is an e-mail address so you can ask your questions and get your answers from the source if you need more clarity to believe their data:

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Regardless of the reasons, foreclosures are on the rise. If people are being stupid on how they are buying houses, could it possibly be because they believed, as they were being told, that the economy was getting better?


#6

This says more about the culture than the economy. If the GNP, personal income, and productivity doubled, people would buy bigger houses, twice as much crap, crap that's twice as expensive, and still be in debt.


#7

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

I don't have these answers, but does it really matter? Much like the other questions prior to yours, they are irrelevant to the fact that foreclosures are on the rise according to this source.


#8

The fast valuation of real estate over the last couple of years allowed a lot of people that were in financial trouble to use there equity to bail them out. But now that the market is returning to normal people will not have that option.


#9

Your implication was that the economy was not doing as well as it is being reported, all because people are losing their houses. I am suggesting that foreclosures - without more qualifying info - does not suggest what you want it to to about the perceived state of the economy.

Your last paragraph gives your point away - you think the economy is not quite as good as is being reported, etc. What I am saying is that offering the rising foreclosures is not proving your point in the way you want it to without more information.


#10

Investors will be running for the exits when the S hits the fan.


#11

This is just the beginning...


#12

"After rising more than 20 percent during each of the first two months of the year, foreclosure numbers experienced a fairly sharp correction in March," said James J. Saccacio, chief executive officer of RealtyTrac. "We saw a similar drop in March of '05, followed by four consecutive months of increases. Many buyers and investors typically start looking for properties in the spring, and that could have provided distressed homeowners a better chance of selling their properties to avoid default or foreclosure."


#13

The reporter does a good job of using percentages to make the numbers look scary, but let's try to look at this broadly.

The historic national average for foreclosures on loans is 1%.

The rate reported in that article for new foreclosures is 0.09% for March -- and I'm sure there are variations among months. The numbers are so small, compared to the population, that small swings in the numbers of total foreclosures can cause large-looking percentage swings. And from what I've read, over the last 5 years at least there have been historically low levels of foreclosures, so just getting back to the historical average, which shouldn't be unexpected, would require an increase.

This isn't to say I don't think there's a real-estate market pullback coming, which I surely do, or that I think interest-only mortgages tacked on to ARMs are a good thing, which I surely don't. It's just to say this article is apparently trying to make much ado about what is currently nothing. Once all those IO periods run out and the ARMs adjust to new rates, people who bought more than they could afford because all they were concerned about were monthly payments are going to be in a world of hurt.

But, as a separate point, that really doesn't have anything to do with the economy as it is now -- in fact, it's more likely to cause harm to the economy going forward than to reflect it.


#14

Agreed, I think she's looking at background noise, she picks some of the less populous states to cite percentages and then even goes on to say that the most populous states dominated as far as absolute numbers go. Even better, was the way she glossed over Utah and Ohio:

"Utah foreclosures increased 21 percent from the previous month and replaced Ohio, where new foreclosures dropped 52 percent, among the states with the five highest foreclosure rates."

So, wait, the state with fewer homes had a 20% rise in foreclosures while the state with more homes had a 50% drop? Where's the problem here?


#15

Okay, I understand what you were saying now. It was a misunderstanding on my part. My point was could this be some sort of indication that the economy is not as good as being reported? Are people taking more risk thinking that the economy is just as good as reported and finding out it's not, or are people just being stupid with their finances again?

I realize their may be other factors involved in these increase of forclosures, however, what real percentage of people do you believe fall into the catagories you mentioned? Also, what makes you think that an increase of people losing their houses is not related to the health of the economy? I would like to understand how you can divorce the two. I thought that this would be an interesting topic of discussion.