Why the Foreclosure Crisis Won't End
By Josh Lipton Sep 10, 2009 3:00 pm
There's no turnaround in sight, and the market can’t ignore that much longer.
According to RealtyTrac, foreclosure filings -- default notices, scheduled auctions, and bank repossessions -- were reported on 358,471 US properties during the final month of summer. That was a decrease of less than 1% from July, but still an increase of nearly 18% from August 2008.
The report showed that one in every 357 US housing units received a foreclosure filing in August, demonstrating that there's still “an ample supply of properties filling the foreclosure pipeline,” said RealtyTrac CEO James Saccacio.
The number of properties either entering default or being scheduled for a public foreclosure auction also hit a new record.
More than two years after the housing bubble began to deflate, there remains a foreclosure crisis in this country with seized properties now accounting for almost one in four home sales nationwide. The elevated rate of foreclosures will remain uncomfortably high as long as housing prices remain depressed and the unemployment rate shoots toward double digits. This could mean more pressure on an already rocked residential real estate market as more supply of homes is added to an already fat inventory overhang.
With one in every 62 housing units receiving a foreclosure filing in August, Nevada continued to document the nation’s highest state foreclosure rate. Florida came in second with one in 140 housing units receiving a foreclosure filing. California took the bronze with one in 144.
Last year, an already thoroughly discouraging 2.3 million home owners filed for foreclosure, notes longtime market pro Dennis Gartman. “In the parlance of the world’s technical traders, foreclosures filings have 'broken out' to the upside,” Gartman wrote in a research note.While there might be preliminary signs that the economy is turning the corner and we’re likely to have positive growth this quarter, we're not yet seeing the follow through in terms of significantly looser housing credit or wage and income gains at the household level, says Deutsche Bank Senior US economist Carl Riccadonna.
“Until the labor market become more stable, the unemployment rate tops out, and we have some income generation, it will be hard for the rate of delinquencies in the housing market to stabilize or turn down,” Riccadonna tells Minyanville.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
(8)
Reply
2009-09-10 15:47:27
lots of good facts and info -
thanks josh!
liked (among a lot of stuff) :
"This is all tough-sounding news for those facing foreclosure, but as for stock market investors, they could apparently care less. The market continues to move higher, despite the high foreclosure rate, weak labor market, and a country full of stressed-out consumers swimming in debt...
That's because the market is forward-looking, and has determined that this historically awful downturn has come to an end...."
that last stmt must been tongue-in-cheek whenever i hear it on "financial" tv, or one-way at least, since the market didn't forward look the crashes of '29, '87, or '08 ;-)
though, i guess if i only count the insiders that were (are?) selling at highs, then "that" market might've had some fwd looking peeking going on there ;-)
hope you post updates, the good and the bad -
thanks again!
liked (among a lot of stuff) :
"This is all tough-sounding news for those facing foreclosure, but as for stock market investors, they could apparently care less. The market continues to move higher, despite the high foreclosure rate, weak labor market, and a country full of stressed-out consumers swimming in debt...
That's because the market is forward-looking, and has determined that this historically awful downturn has come to an end...."
that last stmt must been tongue-in-cheek whenever i hear it on "financial" tv, or one-way at least, since the market didn't forward look the crashes of '29, '87, or '08 ;-)
though, i guess if i only count the insiders that were (are?) selling at highs, then "that" market might've had some fwd looking peeking going on there ;-)
hope you post updates, the good and the bad -
thanks again!
2009-09-10 16:53:26
good stuff
thanks for the article.
as my son looks for a house in Scottsdale, AZ, I keep trying to remind him that there is no rush because of potential for rising prices. Scottsdale is still hung over from the bubble and many areas are still holding on to 2003 prices. As with other bubbles, i think this will over shoot to the downside.
good info... Thanks.
as my son looks for a house in Scottsdale, AZ, I keep trying to remind him that there is no rush because of potential for rising prices. Scottsdale is still hung over from the bubble and many areas are still holding on to 2003 prices. As with other bubbles, i think this will over shoot to the downside.
good info... Thanks.
2009-09-10 18:23:28
Negative spin
This is classic negative spin:
"According to RealtyTrac, foreclosure filings -- default notices, scheduled auctions, and bank repossessions -- were reported on 358,471 US properties during the final month of summer. That was a decrease of less than 1% from July, but still an increase of nearly 18% from August 2008."
The foreclosure rate actually decreased so you spin it by adding "less than 1%" then you confirm by comparing to numbers a year ago before the collapse.
You also comment on the overall continued demise of the market conveniently throwing out data showing price increases in many large metropolitan areas. By the way if you where a home buyer on the street right now in Los Angeles you would find most entry level properties ($500,000 and under in LA) have 20 or more offers on them and going way over asking price.
Many problems still persist in the real estate markets but there are many signs of positive change.
Of course the half empty glass always sells more copy doesn't it?
PS Contrary to your text home owners don't file foreclosure lenders do.
"According to RealtyTrac, foreclosure filings -- default notices, scheduled auctions, and bank repossessions -- were reported on 358,471 US properties during the final month of summer. That was a decrease of less than 1% from July, but still an increase of nearly 18% from August 2008."
The foreclosure rate actually decreased so you spin it by adding "less than 1%" then you confirm by comparing to numbers a year ago before the collapse.
You also comment on the overall continued demise of the market conveniently throwing out data showing price increases in many large metropolitan areas. By the way if you where a home buyer on the street right now in Los Angeles you would find most entry level properties ($500,000 and under in LA) have 20 or more offers on them and going way over asking price.
Many problems still persist in the real estate markets but there are many signs of positive change.
Of course the half empty glass always sells more copy doesn't it?
PS Contrary to your text home owners don't file foreclosure lenders do.
2009-09-10 19:35:20
Negative spin
Nice going Seth .... There is so much spin here. Actually "glass half-full" is a BIG improvement in the housing market!!!
2009-09-11 01:16:26
unemployment is causing forclosures
The unemployment rate in the nation, which stands at 9.4% currently, may even increase to alarming double digit number making the financial situation even worse for the borrowers to repay. The layoffs of many workers have been permanent and hence, their hopelessness in recovery of the jobs or helplessness to repay mortgage over time looks bleak and they resort to foreclosure than choosing to invest or borrow more money on something that they are not sure whether they would be able to afford in the long run.
Read More http://www.housingnewslive.com
Read More http://www.housingnewslive.com
2009-09-11 15:14:43
Negative spin
"...before the collapse". What collapse? There was no collapse. Everything is fine. Why bring up a collapse?
Actually, things being less than 1% less horrible is not that great.
What is your position on the Delusional Positive Spin which we are inundated with?
The Crash has only just begun. You will soon thirst for a half-empty glass.
Actually, things being less than 1% less horrible is not that great.
What is your position on the Delusional Positive Spin which we are inundated with?
The Crash has only just begun. You will soon thirst for a half-empty glass.
2009-09-11 20:40:16
Numbers
358,471 number of foreclosures in ONE month, that seems huge to me....think of all the displaced people...because there are probably 2 adults per household and then the children....that's more than half a million in ONE month! I wonder what the total # of foreclosures for this year so far is?
2009-09-14 08:00:04
Negative spin
To remove the spin is the best. What we have is a real estate bubble. To see when it might end, we could compare to price action in all past bubbles. This is viewable by watching the 100 year price trend for housing. The most recent bubble, was 1991. Prices corrected to below the trendline in 1995, before rising above it in 2001. It wouuld seem that if this bubble were no worse than 1991, then we should see prices rise above the trend again in 2016. Currently prices are 35% above the trendline.
Get real-time options trading ideas from Steve Smith, veteran options trader and newsletter author, plus let him show you the way to cut risk and boost your returns through the strategic use of options. Click here for a free 14 day trial to OptionSmith by Steve Smith.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved
