Skip to comments.Foreclosures Drop as Future Spike Looms
Posted on 04/13/2012 7:53:34 PM PDT by Lorianne
Several states saw huge jumps in foreclosure starts in March, a foreboding sign of things to come.
On their surface, the latest foreclosure numbers from RealtyTrac look pretty good. Filings were down in the first quarter of this year to the lowest level seen since 2007, 2% lower than the previous quarter and down 16% year-over-year.
In March, foreclosures were down 4% from the previous month with 198,853 filingsthe first time a monthly report has come in under 200,000 in almost five years, and an annual decline of 17%.
But the industry should still be waiting to exhale, said Brandon Moore, CEO at RealtyTrac, in a statement discussing the numbers. "The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated. There are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and non-judicial states in March. The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen."
Indeed, first-time foreclosure starts, including default notices and scheduled foreclosure auctions, were up 7% in March from February, the third consecutive month to show an increase, with red hot activity in some states, including Nevada (up 153%), Utah (up 103%), and New Jersey (up 73%).
To read the full report, click here.
So, if you’ve got equity in your current home, would now be a good time to sell, wait a bit, and then scoop up a foreclosure at a discount?
My personal advice is don’t sell, hold onto your homes and pay them off eventually, then continue to live in them mortgage free. Why is everyone always buying and selling and moving, for heaven sakes, it just keeps them in constant debt.
Foreclosures may spike, but the issue is processing. There’s such a backlog in some states that it takes up to a year for the state court to process final judgments. And prior to that, there’s the application process. Once processed, the foreclosed property can then finally be sent to the county to be sold off which may take another month or two. So just because a judge puts a final stamp of approval on a foreclosure doesn’t mean the property will hit the auction anytime soon. The courts have more than they can handle right now.
The Second Foreclosure Tsunami Is Coming, And Is About To Kill Any Hopes Of A Housing Bottom
Heres the simply math: there will be no housing bottom until the 9 million excess homes clear. Period. Until then it is a buyers market, even if said buyer is unable to obtain bank financing, as ultimately it will be the seller who is forced to monetize (or vacate if underwater) their home in a world of ever diminishing cashflows. The fear of the supply onslaught will only make the dumpage that much faster.
Courtesy of RealtyTrac we know how many homes were foreclosed upon in the period until November 2010, when robosigning became a prevalent, if short-lived issue, or roughly 330,000 a month. In the aftermath, this average has dropped to 227,000 a month: a roughly 100,000 difference in less foreclosures each month! Which means that in the deferred amount of foreclosures, over and above the already endogenous deterioration in home prices and declining household income, means that there is at least 1.6 million in homes that are just waiting for a green light to be foreclosed upon.
“it just keeps them in constant debt.”
I only buy for cash!
Sometimes you need to move to find a job.
It depends on your state and time frame. In most states there is a large number of properties in or near foreclosure but the banks have been sitting on them hoping the market in near a bottom and will improve. I think the conventional wisdom concerning almost everything is to wait til after November to make a major move...
I’m remodeling in order to offset some of that depreciation. It’s a risk like any investment but it makes sense to me. I think the biggest risk in homeownership is the local board of education frankly. Homeowners need to unite against these bandits.
“Why is everyone always buying and selling”
because due to Dubya’s idiotic “ownership society” social engineering folks who had no business owning a home were given carte blanche and were flipping them for get rich quick profits.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.