Skip to comments.Defaults rise in California
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.coms 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?
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.
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