Posted on 08/22/2006 8:16:02 AM PDT by ex-Texan
• Q2 jumps by 67 percent year over year
• Buyers done in by ‘creative mortgages’
according to figures released Monday by Foreclosures.com, a Central Valley-based real estate investment advisory firm and publisher of foreclosure property information.
"Year over year at the end of the second quarter of 2006, foreclosure activity in California has increased more than 67 percent," says Alexis McGee, president of Fair Oaks-based ForeclosureS.com.
The once hot housing markets in Las Vegas and Phoenix are cooling off rapidly and defaults there are on the rise as well, she says.
"Both Las Vegas and Phoenix were impacted by speculators," says Ms. McGee, and more than 25 percent of new home sales in both markets were going to out of state investors who had no intention of ever occupying the homes they purchased.
Now those who came late to the party find themselves squeezed by rising interest rates and resulting negative cash flows, she says.
“The speculators are definitely on the run, and walking away from properties they cannot afford to hold and cannot sell at a profit," says Ms. McGee.
In Colorado, foreclosure activity has put Denver well up in the top 10 of metro areas with the highest foreclosure rates, according to Foreclosures.com’s figures.
“Almost 5,300 homes in Colorado have already been lost in foreclosure and, as of August 11, over 11,300 were in the pre-foreclosure process," says Ms. McGee. She cites recent reports by economists that showed that Colorado was lagging behind the rest of the nation in economic recovery from the 2001-2002 recession.
"A more severe situation, however, is in California," she says. "A primary reason is the overwhelming use of so-called creative mortgage products people were sold in order to buy ever more expensive homes."
More than $1 trillion of these exotic mortgages were due to reset in the next 18 months, she says, "and payment shock to such homeowners would be severe if not financially fatal."
Foreclosure activity in California in the second quarter jumped by 67 percent over the year-earlier period * * * “The speculators are definitely on the run, and walking away from properties they cannot afford to hold and cannot sell at a profit . . ." “Almost 5,300 homes in Colorado have already been lost in foreclosure and, as of August 11, over 11,300 were in the pre-foreclosure process . . ."
The naysayers reject the truth. They claim, "It's always a good time to buy a house." Yeah, right. Nada por nada. Get your free mortgages on line. LOL, LOL, LOL! "Nothing to see here. Lock your windows. Time to move on."
Folks just gotta separate their 'wants' from their 'gots!'
The 67% increase in foreclosures is a totally meaningless number unless it is placed in the context of a hard number for last year.
This doesn't belong in Front Page News.
It is always a good time to buy a house, if you can afford it (without a creative mortgage)and expect to stay there for a long time.
You need to read the report before you attack the messenger. 67% was stated as the increase over the previous year. "Year to year" means "over the year before."
Foreclosures also up in Florida.
I might disagree with you. Eventually prices will always rise, but if there is going to be a correction say in NY and California's housing market, it might be best to sit back a year, let all the foreclosures come on to the market, and buy in then and save 5-10%, rather than buy now.
There will always be corrections; the issue you raise then becomes if you "save" 5-10% not if it is a good long term investment.
If you could buy a house today for $1,000,000 or tomorrow for $500,000 you are going to tell everyone that today isn't a bad day to buy becasue you are going to live in it?
It wasn't the purchasing, it was the adjustable mortgages.
1.I read it. 2.I know what year over year means 3.The 67% is still meaningless unless attached to a hard number from the year before. If the previous years foreclosures number only 100 then the increase of 67 more is hardly important because it is a small number. Then we should know how many of the actual foreclosures were investment (spec) properties and how many were homes bought to reside within. Also CA is among the hottest of the RE markets so a correction is almost guaranteed. This correction will lower the price of the properties and make them more affordable. This correction is nothing more then a case of the supply demand structure being out of whack due to soaring prices of the commodity involved. When prices get super high more and more properties flood the market which allows the potential buyers a much greater choice and swings the power from seller, where it was, to the buyer where it is now.
I'm not sure that's always true. There are all-brick homes in SE DC that were once VERY desirable. Now... Well you can imagine, and the same is true in inner cities all over the country.
A warning to the young. Never take a loan you can't pay off.
Really? Do you really think the gubmint should dictate which types of contracts I'm allowed to enter? Do you really think the gubmint knows what is best for me? If I make $100K a year, should it really be illegal for me to buy a $200K home with an interest only loan? Should it be illegal for everybody or just those that are not as financially savy as you?
LOL!
Exactly. And with record low interest rates and 30% appreciation, just how many homes were going into foreclosure. Would you believe record low foreclosures? Of course. Oh, but that won't stop the scare-monkeys from using stats.
*Ping* !
2006 $500,000 2007 $650,000 2008 $845,000 2009 $1,098,500 2010 $1,428,050 2011 $1,856,465 2012 $2,413,405 2013 $3,137,426 2014 $4,078,654 2015 $5,302,250 2016 $6,892,925 2017 $8,960,802 2018 $11,649,043 2019 $15,143,755 2020 $19,686,882
LOL, LOL, LOL !!
"It is never a bad time to buy a home if it is where you plan to live. Real Estate ALWAYS increases in value (Love Canal excluded) over time even though it has it's peaks and valleys."
I'll bet the residents of Tokyo would be glad to hear that they will recover the >50% drop in the value of their real estate.
It will be their grandchildren that see a return to the previous highs.
( No more Olmert! No more Kadima! No more Oslo!)
It was the ARM's in combination with no income verification, 100% financing, and max out seller contribution loans that will do this bubble in.
( No more Olmert! No more Kadima! No more Oslo!)
The argument on the interest rates has gone on for over a century and how many family failures such and such an interest rate at time period, it would generate. Indeed in the 1950s loans over 10 years were consider immoral since a young family would be in mortgage debt for all the early childhood years.
Similar discussions rose around the 30 year loans and now we are talking about interest only loans in which young families are not encouraged at all to get out of debt.
The next stop in this process is loans on which your children and grandchildren have to pay off or never pay off. This is already underway in Japan.
Right now, I know of two families severely impacted by interest only loans. Their unhappy prospect is to have to leave their homes with a hanging debt over their heads that make their prospects of getting another mortgage in doubt.
So I do think the morality of these mortgages should be discussed or else are you against free speach?
5 this year versus 3 last year is also a 67% increase. Percentage is only meaningful when compared to a base number to provide scale.
You might be surprized to see what those brick houses in SE are going for now in areas that you wouldn't have driven through 3-4 years ago. Trinidad in NE is the same. what you might have seen sell for 30K 4 years ago sells for 300k (at least did until this spring). DC is not a good example for what you are trying to say. Baltimore is.
( No more Olmert! No more Kadima! No more Oslo!)
Be that as it may, they have the home to LIVE in. Besides, I said the property would increase over time and not what the time span would be. That said, Tokyo is an extreme exception as you know, or should know.
I don't think "morality" comes into it. I won't flame you or use sarcasm, but Fan's point is pretty clear -- I could hurt myself by taking the wrong job, buying the wrong car, marrying the wrong woman, etc. When does the g. get to make these decisions for me? If Joe wants to sell me a mortgage, and I (not being in a nuthouse or anything) want to buy the mortgage, being that I own myself (not government, or my friends, or my neighbors who have a majority vote against me) what would be immoral is for somebody else to come along and claim ownership of a portion of me, and tell me, like my father did when I was nine, "No." Also, my children and grandchildren will never "have" to pay off any of my debts. They may be left with zero inheritance because of my stupidity, but nobody will ever tap them on the shouder and say, "Your father owed me ten bucks, now go to the bank and drain your account to pay me."
Yes, but there is certainly NO GUARANTEE of that. I believe I saw in the Post a while back that, in real dollars, DC's poorest neighborhoods peaked in price in the 1870!!! That's 130 years of decline. I then KNOW I saw in the local (Loudoun County) real estate rag, that said prices peaked during WWII. Either way, that's easily a lifetime of declining home prices.
DC IS a good example of what I'm saying. There are still PLENTY of parts of DC where once very desirable homes are worth less than the value of the crack dust that could be vacuumed from between the floorboards.
Oh! You nailed me there, I must admit. :)
Another one of the "on fire" markets that was crying for a correction.
Last time I checked the V.A. foreclosure list for the state of California there were exactly ZERO foreclosures avaliable in the entire state of California. ZERO. A 67% increase would give you, let me think, wait for it, yeah, ZERO.
What you are talking about it the American Dream of Homeownership. With an interest only loan, I only see those prospects dimming as young folks try to climb that slippery slope. For unless they are very fortunate to have very long time when interest rates stay stable or do not go up. However, this is not the case right now.
Interest rates are very likely to go up do to many forces including the government trying more control of inflation through prime rate hikes.
Thus, I forsee many young families in dire straights and having to go onto welfare increasing their chances of family breakup.
Achieving the American Dream of Home Ownership through Interest only loans, IMHO, has been a wicked nightmare for a society bereft of moral values.
OK so there are some today. 29 in the entire state.
And the V.A. is not the only source
REO Property List
Property List - 29 properties
ID State City Bdrms Baths Sqft Price Photo
6236665 CA Apple Valley 4 3 2362 $417,500
6207609 CA Biggs 4 2 2700 $327,000
34716761 CA Buena Park 5 3 3191 $679,900
7945041 CA Chatsworth 4 3 2058 $694,900
7799166 CA Clearlake Oaks 2 1 900 $139,000
38118378 CA Desert Hot Springs 4 3 1923 $335,000
40533671 CA El Cajon 3 2 1437 $534,900
34151084 CA El Granada 3 2 1260 $699,900
7799125 CA Joshua Tree 3 2 1362 $43,000
38116398 CA Lathrop 4 2 1604 $399,900
5893821 CA Lincoln 4 4 3469 $699,900
34908798 CA Los Angeles 4 2 1486 $570,000
7528235 CA Los Angeles 6 4 2548 $719,500
37068178 CA Los Banos 4 2 1768 $424,900
38098083 CA Manteca 3 2 1561 $399,900
37046349 CA Menifee 2 2 1255 $307,000
34141606 CA Menifee 3 2 2255 $429,900
34875344 CA Modesto 2 1 943 $252,500
7528433 CA Montclair 4 3 2250 $599,900
34152116 CA Oakland 2 1 864 $349,900
33599515 CA Oakland 4 4 4300 $1,099,000
7577133 CA Roseville 6 5 4132 $806,900
41353921 CA Sacramento 3 1 1168 $435,000
34223115 CA San Diego 3 2 1020 $299,900
34183608 CA San Diego 3 2 1209 $316,900
34929059 CA San Jacinto 5 3 3350 $457,500
34998708 CA San Marcos 4 2 1315 $523,500
38038212 CA San Marcos 5 4 3419 $741,900
34173161 CA Santee 4 2 1722 $529,900
Select Another State
( No more Olmert! No more Kadima! No more Oslo!)
I've been wondering when this would start. The prices there are five or six times what I owe on my own comparable home in East Texas. It's craziness. They are at the end of the line with this "bigger fool" theory. I was watching TV the other day and this particular house sold for $550,000 and it was a piece of crap. I wouldn't have given $25,000 for it and it took another $80,000 to make it habitable and it sold for $780,000. These people are crazier than the lunatic that runs Iran. At least he knows what he is doing (to destroy the west). These people out in California do not have a clue. Going to be a lot of bankruptcies and then a lot of people who won't and will owe for the rest of their lives until the grim reaper comes collecting. Lunancy. Sheer lunacy.
You didn't say the loans were immoral in your original post, you said they should be illegal. I'll ask again; do you really think the government should make interest only loans illegal?
"When does the g. get to make these decisions for me? If Joe wants to sell me a mortgage, and I (not being in a nuthouse or anything) want to buy the mortgage, being that I own myself (not government, or my friends, or my neighbors who have a majority vote against me) what would be immoral is for somebody else to come along and claim ownership of a portion of me, and tell me, like my father did when I was nine, "No.""
Hey! You are describing personal responsibility. We cannot have that around here. Some people on FR cannot stand the discussion of PR, and your ideas will be offensive to them. They believe that the gov't should guarantee that they will never suffer a loss whenever they take a risk. Whether it's their 401K, their bank account, their stock picks, or their home purchase, by God the gov't ought to keep them from making a mistake.
If you made the same statement to a lefty, $10,000 says they wouldn't have a clue what you were talking about.
On average, lenders filed 32,762 notices of default each quarter over the past 14 years.
Q2 06's 20,752 total was the highest since 25,511 were filed in first quarter 2003. That was up 10.5 percent from 18,778 the previous quarter and up 67.2 percent from 12,408 in the second quarter of last year.
Foreclosure activity hit a low during the third quarter of 2004, when lenders filed 12,145 default notices. Current statewide foreclosure activity amounts to about one-third of the peak level in the first quarter of 1996, when 59,897 defaults were filed.
While the YOY quater rise was the greatest since Dataquick started tracking, last years numbers were a statistical anomoly as well.
That said, trouble is right around the corner. According to Dataquick, "the spike in defaults is mainly the result of slowing price appreciation. It makes it harder for people behind on their mortgage to sell their homes and pay off the lender." With supply skyrocketing and appreciation leveling off (if not falling), those with no equity and exotic mortgages are going to get burned.
http://www.dqnews.com/RRFor0806.shtm
" "the spike in defaults is mainly the result of slowing price appreciation. "
Bush's fault.
This is the worst economy in 50 years. Oh, wait, that's what Clinton said to the first Pres. Bush. I expect Senator Clinton to say the same thing after she kicks off her campaign.
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