Thursday, August 13, 2009

RealtyTrac: U.S. Foreclosure Activity Up 32% from July 2008 and 7% from June 2009

According to this RealtyTrac press release, U.S. FORECLOSURE ACTIVITY INCREASES 7 PERCENT IN JULY, in July 2009 US foreclosures increased by 32% from July 2008 and by 7% from June 2009. According to the press release, July is the 3rd time in the last 5 months that a new record has been set for foreclosure activity. Again, the 4 hardest hit states were Nevada, California, Arizona and Florida. However, there were a many other notable problem areas with Utah at #5, Idaho at #6, Georgia at #7, Illinois at #8, and Colorado at #9. Tennessee ranked 22nd (worse than average), while Pennsylvania, a more stable area, ranked 34th (better than average). A complete list of the July 2009 state by state foreclosure rankings are below (courtesy of RealtyTrac):

U.S. Foreclosure Market Data by State – July 2009



Properties with Foreclosure Filings

Rate Rank

State Name

NOD

LIS

NTS

NFS

REO

Total

1/every X HU (rate)

%? from Jun 09

%? from Jul 08

--

U.S.

62,939

71,565

104,830

33,557

87,258

360,149

355

6.74

32.32

33

Alabama

0

0

1,630

0

452

2,082

1,026

-23.34

141.25*

24

Alaska

3

0

266

0

102

371

761

76.67

79.23

3

Arizona

2

0

14,120

0

5,572

19,694

135

16.99

47.52

21

Arkansas

104

0

1,319

0

828

2,251

572

35.03*

110.77*

2

California

50,917

0

35,802

0

21,385

108,104

123

6.99

49.55

9

Colorado

5

0

3,947

0

1,536

5,488

388

-4.12

2.08

29

Connecticut

0

1,084

0

190

295

1,569

917

7.84

-22.10

37

Delaware

0

0

0

226

72

298

1304

-12.61

125.76


District of Columbia

267

0

219

0

35

521

546

24.94

-6.80

4

Florida

0

35,227

0

14,502

6,757

56,486

154

6.78

23.11

7

Georgia

1

0

7,616

0

3,519

11,136

356

-20.59

10.68

15

Hawaii

186

0

481

0

323

990

512

40.23

332.31

6

Idaho

1,290

0

1,051

0

150

2,491

253

32.43*

166.13*

8

Illinois

0

6,770

0

4,060

3,694

14,524

361

34.53

62.92

17

Indiana

0

1,015

0

1,881

2,290

5,186

536

-6.86

8.43

43

Iowa

0

0

227

0

374

601

2,212

7.32

20.68

30

Kansas

0

183

0

408

728

1,319

925

37.68

94.83

39

Kentucky

0

405

0

488

341

1,234

1,545

9.30

0.65

40

Louisiana

0

6

0

928

183

1,117

1,664

-23.07

9.83

41

Maine

0

138

0

212

57

407

1,712

39.38

59.61

11

Maryland

0

3,521

0

633

998

5,152

450

66.19

65.98

16

Massachusetts

0

3,548

0

1,049

517

5,114

532

58.77

43.09

19

Michigan

1

0

2,695

0

5,561

8,257

548

-39.32

-28.76

20

Minnesota

12

0

2,266

0

1,847

4,125

559

23.80

146.86

45

Mississippi

0

0

354

0

124

478

2,625

-36.69

151.58*

27

Missouri

5

0

1,729

0

1,441

3,175

834

2.02

-9.60†

47

Montana

0

0

2

0

88

90

4,839

45.16

-36.62

46

Nebraska

0

164

0

5

26

195

4,004

30.87

-70.45

1

Nevada

7,139

0

7,833

0

4,563

19,535

56

4.11

94.18

31

New Hampshire

0

0

611

0

12

623

954

42.24

-31.01

18

New Jersey

0

4,210

0

1,505

752

6,467

541

49.25

39.92

32

New Mexico

0

479

0

270

128

877

983

23.52

61.21*

38

New York

0

4,613

0

871

470

5,954

1,334

22.76

-3.45

36

North Carolina

1,120

0

756

0

1,552

3,428

1,203

7.97

-20.33

48

North Dakota

0

1

0

26

23

50

6,211

56.25

-23.08

12

Ohio

0

5,062

0

3,032

2,927

11,021

460

-2.05

-18.10

35

Oklahoma

595

0

522

0

420

1,537

1,056

18.69

-11.05

10

Oregon

29

0

2,463

0

1,113

3,605

446

15.80

84.40

34

Pennsylvania

0

1,869

0

1,805

1,642

5,316

1,030

7.59

27.36*

28

Rhode Island

0

0

17

0

488

505

893

-44.63

2.23

26

South Carolina

0

1,209

0

484

735

2,428

833

44.01

82.15*

42

South Dakota

0

60

0

56

48

164

2,178

45.13

446.67*

22

Tennessee

0

0

2,263

0

2,309

4,572

596

-2.20

0.15††

25

Texas

24

0

7,194

0

4,859

12,077

781

0.45

16.64

5

Utah

1,234

0

1,728

0

732

3,694

250

6.42

93.30

50

Vermont

0

0

0

0

11

11

28,312

0.00

120.00

14

Virginia

5

0

3,927

0

2,474

6,406

511

23.48

11.51†

13

Washington

0

0

3,632

0

1,738

5,370

511

14.79

94.42*

49

West Virginia

0

0

119

0

20

139

6,350

21.93

265.79

23

Wisconsin

0

2,001

0

926

890

3,817

671

8.10

86.74*

44

Wyoming

0

0

41

0

57

98

2,473

16.67

-26.32

* Actual increase may not be as high due to data collection changes or improvements
† Collection of some records previously classified as NOD in this state was discontinued starting in January 2009
† Collection of some records previously classified as NOD in this state was discontinued starting in September 2008


U.S. Foreclosure Rates Heat Map – July 2009

A US Foreclosure Rates Heat Map for July 2009 is below (courtesy of RealtyTrac). As you can see, many counties in Tennessee experienced high rates of foreclosure activity in July 2009. Although the map is small (and difficult to tell for sure), it appears that some of the hardest hit counties are Davidson, Williamson and Rutherford. Rutherford County TN appears to have one of the highest foreclosure rates in the entire the state of Tennessee.



After the RealtyTrac press release was issued, a Bloomberg article, U.S. Foreclosure Filings Set Third Record-High in Five Months, obtained additional information from the following real estate sources and experts.
  • National Association of REALTORS (NAR) - The median price of an existing single-family house dropped 15.6 percent to $174,100 in the second quarter of 2009, the most in records dating to 1979.
  • Zillow - Almost one-quarter of U.S. mortgage holders are now underwater (i.e. they owe more in mortgage debt than their homes are worth).
  • Stuart Gabriel (director of the UCLA Ziman Center for Real Estate in Los Angeles) - “There are a slew of factors showing fundamental weakness on the demand side: tighter underwriting, job loss, investors who’ve been badly burned. We have not seen the bottom of the housing market.”
  • Diane Swonk (chief economist at Chicago-based Mesirow Financial Inc.) - “We’re in a deep hole. There is a whole new wave of foreclosures tied to the cyclical dynamics of the economy. It has been more profitable to put a home in foreclosure than restructure the loan. The only thing that helps is forgiveness of principal, and there is little willingness to do that.”
The information above from RealtyTrac and the additional information and quotes are all proof that what I said several months ago is true: "The worst is yet to come." The real estate market is still declining and will actually accelerate downward starting in the summer of 2010. The major issues that will continue to harm the real estate market are as follows:
  • Continued job losses.
  • More and more homeowners underwater.
  • Massive government debt which will result in higher interest rates.
There is no way to escape what is coming. All the events that will cause the impending declines have already happened.

Tuesday, August 11, 2009

4 Reasons the Recent Housing Upswing is Nothing More than a Temporary Slow Down on the Way to the Bottom

The current housing upswing in sales that is leading many clueless media pundits to claim the housing market bottom is near is noting more than a pit stop on the way to the bottom. I believe that this "upswing" is really a mirage. Below are 4 reasons why the real estate market is still headed down.
  1. Low priced foreclosure sales are artificially inflating sales figures. However, don't take my word for it. According this Forbes.com article, America's Best And Worst Housing Markets, Stan Humphries, Zillow Chief Economist, states that "In many areas, low-priced foreclosure resales are boosting overall sales, which keeps overall home prices down."
  2. Cyclic sales are distorting the sales volume and sales price figures. Don't believe me? That's fine. Listen to a real estate appraiser. "Prices are supposed to go up in the spring; they're seasonal," says Jonathan Miller, president of Miller Samuel, a Manhattan-based appraisal firm. "The seasonality is playing tricks on our eyes."
  3. Government meddling is distorting the market. In addition to the normal spring bump in sales volume and prices, the $8,000 first time home buyer tax credit is artificially causing a higher level of sales, particularly on lower priced homes where $8,000 is a larger % of the sale price. Buyers are rushing to buy homes and close on the purchases before the tax credit expires on 11/30/2009. Again, don't rely on me. The same Forbes article quotes Stan Humphries, Zillow chief economist, as stating "Current trends may owe a lot to seasonality and the $8,000 first-time buyer tax credit. As such, current demand may not be based on sustainable market forces. With negative equity rates high and unemployment continuing to rise, we have likely not seen the peak in foreclosure rates."
  4. More and more homeowners owe more than their homes are worth. According to the Deutsche Bank report mentioned in my recent blog post, SCARY STUFF: About half of U.S. mortgages seen underwater by 2011, 48% of homeowners will be underwater by 2011. The result of this will be that more and more homeowners will simply walk away from their homes as they give up on the notion that their homes will ever be worth what they owe.

SCARY STUFF: About half of U.S. mortgages seen underwater by 2011

According to this Reuters article, About half of U.S. mortgages seen underwater by 2011, a Deutsche Bank report states that "the percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March (2009)." According to the Deutsche Bank report, home price declines will affect "conforming" or "prime" borrowers (i.e. those that put 20% down, had documentable income and good credit" the most. The report goes on to state that 41% of prime conforming loans will be underwater by the first quarter of 2011, up from 16% at the end of the first quarter 2009 and 46% percent of prime jumbo loans will be underwater, up from 29%. The report goes on to state that 69% of subprime loans, will be greater than the underlying property value in 2011 (up from 50%) and 89% of option adjustable-rate mortgages (option ARM's), which artificially reduced payments by allowing payments to be lower than the interest due resulting in increasing principal balances, will be underwater in 2011, up from 77%.
In June 2009 Deutsche Bank covered 100 U.S. metropolitan areas and forecast home prices would fall 14% through the 1st quarter of 2011 for a total drop of 41.7%.

The Deutsche Bank reports stated that the regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. The report added that Las Vegas and parts of Florida and California will see 90% or more of their loans underwater by 2011.
The Deutsche Bank analysts stated that "For many, the home has morphed from piggy bank to albatross."
The Reuters article states that "the drop in home prices is fueling a vicious cycle of foreclosures as it eliminates homeowner equity and gives borrowers an incentive to walk away from their mortgages. The more severe the negative equity, the more likely are defaults, since many borrowers believe prices will not recover enough." (Translation: homeowners will walk away from their homes and give the keys back to the banks once they realize their homes will never be worth enough to pay off the debt.)

The above is more evidence that this housing market mess is far from over despite the nonsense you hear from the National Association of REALTORS (NAR) and the Obama Administration. There will be high numbers of foreclosures and short sales for years to come.

If you are a homeowner in Middle Tennessee who cannot pay your mortgage (due to losing your job, having your income reduced, illness, health problems, etc.), or your home is already in foreclosure, or you owe more than your home is worth, please contact me to discuss your options including loan modifications or short sales. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I serve real estate owners, homeowners and investment property owners in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN. If you do need to short sell your home (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home), or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Fannie Mae Loses $14.8 Billion in 2nd Quarter of 2009

According to this Fannie Mae News Release, Fannie Mae Reports Second-Quarter 2009 Results, Fannie Mae lost $14.8 billion in the 2nd quarter of 2009. The news release states "Second-quarter results were driven primarily by $18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment." Translation: loan defaults and foreclosures are killing them. Mark my words, this is only going to get worse.