from sddt.com:
Foreclosures in San Diego County reached their highest monthly totals since September 2008, while notices of default spiked after two months of decline.
June’s 3,715 notices of default were the second highest total for a single month on record. The figure is a 12.9 percent increase from May.
Year over year, June 2009 had 8 percent more notices of default than June 2008. Year to date, notices of default are outpacing their 2008 totals by 7 percent.
The 1,799 trustee deeds filed in June were 78.6% higher than May’s filings.
The increase in trustee’s deeds filed is not surprising after March’s record-breaking number of 4,260 notices of default filed.
“It’s a great puzzle,” said Alan Nevin, director of economic research for MarketPointe Realty Advisors. “Between the combination of lenders not being able to handle the current workload in addition to the Obama plan coercing lenders to be more kind, we don’t know what the hell’s happening out there.”
Seems like trying to push back the ocean, to me.
Obviously interfering with markets will make price discovery more difficult. I still think it all goes back to jobs and wages and confidence you won’t lose your shirt if you buy a property.
this seems to confirm what Mr. Mortgage (Mark Hanson) has been predicting in the last few months.
People are exhausting their UE benefits in record numbers these days, which may be the last straw in holding on to a home.
Has Alan Nevin ever known what is happening out there? According to Nevin there is a shortage of homes and people are supposed to be so desperate they would keep their homes at any costs. Hence he does not understand why so many are going to foreclosure.
This doesn’t provide any additional data as far as the trustee sales totals but breaks down the number of homes going back to the bank versus purchased by third parties at trustee sales:
http://effectivedemand.blogspot.com/2009/06/update-san-diego-trustee-sales-for-june.html
You see similiar increased third party percentages across Ventura, Los Angeles, Orange and San Diego counties. The low inventory on the low end is presenting the investors opportunities to jump in and fill the gap by buying wholesale using their liquidity advantage and selling retail.
I’d imagine if trustee sales continue to increase and that inventory ever makes it to market we will see a decrease in investor participation in trustee sales due to falling prices and increased supply.
Buy low and sell high.How many years will it take for another real estate bull run?People have very short memories.
E.D.,
What is the actual count of third-party purchases at the courthouse steps? It looks to be around 300 last month?
Dang, everyone is doing it now.
P.S. You don’t mind if I call you E.D. do you?
thanks to Michael for sending this over:
http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine
Alan Nevin:
we don’t know what the hell’s happening out there.”
At least now he’s indicating he is clueless. Before it was…
2005: we in California who are homeowners have been remarkably blessed
2005: Asked where he would recommend buying real estate in the North County coastal area, Nevin replied: “Everywhere. There’s no negatives.”
2007: I see a stable market through 2010.
2008: Anybody who’s going to walk away from a house or condo has already done it. LOL LOL
HBHS: Alan Nevin
It is a gross error to label Alan Nevin an economist. He’s a marketing firm’s mouthpiece.
The data is plainly obvious. Many people bought houses they could not afford using unrealistic assumptions of future value.
If they look to the 1990-97 timeframe, they’ll see the low-end homes cleared out by ’93, but the high end homes continued to eat equity until ’96. We’ll see median price rise only because it is the mid- to upper-tier homes flooding the market.
The moratorium really put a loop in this real estate roller coaster ride.
And, it is hard to read the numbers.
-Housing Tracker says there are currently 11,949 listings.
-JtR says that about 2,000 homes closed last month, (+/-6,000 2Q 09).
-The graph seems to very roughly indicate that about 2,000 homes given NOD’s go to Trustee Deeds, (I’m looking at mid-year 2008 before the moratorium).
Would the sales equal the amount of foreclosures entering the market and thereby balance each other out?
Still leaves a stagnant market of about 6 months supply for San Diego County.
It confirms the permabear in me but now I have to wonder….in a few months will it be 78% be revised to 6.5%?
“The data is plainly obvious. Many people bought houses they could not afford using unrealistic assumptions of future value.”
And I suspect that one reason there are so many foreclosures is that even with lenders being forced to “be more kind,” many bubblebuyers bought so unrealistically that they still can’t afford their homes at today’s real interest rates even if their balances are modified to current property value.
jim,
Great rolling sones article.Goldman sachs is as corrupt as they get.
Cap and trade is their next big scam disguised as an enviromental plan.Get ready to pay more taxed if this scam passes.
http://www.financialtrustindex.org/
WHEN HOMEOWNERS WALK AWAY: NEW RESEARCH REVEALS MORE THAN 25 PERCENT OF MORTGAGE LOAN DEFAULTS ARE STRATEGIC
June 25, 2009—While the Obama administration’s housing policy has been largely influenced by a study of the Boston housing market during the 1990-91 recession in which homes devalued by approximately 10 percent, new research suggests that a novel phenomenon is at hand in the fallout of today’s more severe housing crisis – strategic default on mortgage loans. Given that homes in numerous parts of the country have lost more than 30 to 40 percent of their value, many homeowners say they would simply walk away from their loans – without fear of repercussion.
The inaugural work of the Financial Trust Index Working Paper Series, “Moral and Social Restraints to Strategic Default on Mortgages,” looks at American homeowners’ propensity to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage. By using new survey data, the paper estimates that more than a quarter of defaults on mortgage loans are strategic, especially when home values have fallen by more than 15 percent. This paper is the first to examine the economic and moral implications of strategic default in the current recession.
Effective Demand,
Thanks for the chart (and JtR thanks for all the information you provide). A lot of you know more about this than I do, but I’m wondering if the increase in investor purchases may signal that more of the trustee sales are on pre-bubble mortgages that ended up under water because people took cash out of their homes and/or lost their jobs. Otherwise, why would the banks let the homes go to someone who can mark them up significantly when the bank can bid the total due on the mortgage? It seems like some of these sales must not have bubble-era first mortgage balances. Maybe people just lost their jobs, but I also see a lot of short sales where the seller’s purchase price is way under the short sale asking price.
I recently noticed two homes in my area that appeared to go directly from foreclosure to rental (with a quick stop for a two week makeover)with no attempt to sell them. I looked up the one house I was certain was a foreclosure and the buyer at auction appeared to have multiple limited partnerships for homes. Maybe some investors have decided that they can make a decent profit on rentals and then sell later on. At the prices they are paying at auction, the rentals will pencil out as profitable. That might account for at least a little bit of the “shadow inventory.”
Thats true I think Genek. And the factor of doom for housing in that case is really the issue that even if the homeowner wants to keep the home and ditch the credit card payments, they can’t. The law itself is now written such that your Macy’s card is equal to the home. The fed has a working paper on this infact.
Potemkin Villager-
>> Otherwise, why would the banks let the homes go to someone who can mark them up significantly when the bank can bid the total due on the mortgage?
My theory (and has been for a while) is the banks, at some point, are going to need more cash than a sale. Like the druggie who bought an escalade for $60k but needs the cash for drugs NOW, so he’ll sell the escalade for $15k.
TARP does help the liquidity situation a bit, but it has strings attached. I think we’re getting closer to where the banks just start unloading for cash.
Case in point: a home in OC (story in the Register) listed for $299 and had over 30 offers. The one they went with was $319k in cash, although one offer was for over $400.
Cash is king. Hail to the king, baby.
Jim,
According to ForeclosureRadar, 3rd party sales were 322 and going back to the bank was 1293.
Potemkin,
Many banks bid the lesser of Full market value (FMV) or the total owed on the mortgage. Some banks bid at a certain discount to FMV to account for fees and carrying cost. So what you see selling is the homes where either FMV is off (a bad valuation) or the discount to FMV is enough to let the investor make money. Sometimes, in my observation, you get both FMV off on a bank that sells at a discount to FMV.
From my observation of the trustee sale rolls in my local area in Ventura I haven’t really seen the situation you describe. In my observation what has changed is that investors belief in FMV (i.e. they have more pricing power) has changed because of the low inventory in the affordable ranges. That is, investors are taking on what would have been a marginal deal a few months before. I’ll have to see if I can quantify this better because this is purely observation at this point.
“By using new survey data, the paper estimates that more than a quarter of defaults on mortgage loans are strategic, especially when home values have fallen by more than 15 percent.”
People who continue to make payments on underwater mortgages despite all the measures government has taken to try to “help” them modify their loans or just walk away with reduced consequences belong to a dwindling number of borrowers who consider their signature on a mortgage a commitment they are determined to fulfill. We can either view these folks as suckers or as people whose personal honor and integrity are worth more to them than the amount of their negative equity; which view we choose probably says more about us than it does about them.
Oops. #20 was me.
They aint making anymore land in california you know.Get on board the new gravy train.
GeneK:
Are you saying if I support same sex marriage, then I am likely to have a same sex partner ?
Well, you’re more likely to have one than someone who doesn’t support it, aren’t you…?
Supporting doesn’t necessarily mean doing. I think highly of people who choose to keep paying their underwater loans and I’d like to think I’d have the integrity to do it as well, but so far that hasn’t been tested.
People are exhausting their UE benefits in record numbers these days, which may be the last straw in holding on to a home.
tj and the bear | July 3rd, 2009 at 12:03 am
I think it is more that they could never afford them in the first place, and certainly not on only UE.
But they are not exhausting their UE, as it is now 79 weeks in duration in California.
Potemkin Villager,
As others stated, the banks would probably rather take the cash now. Because there was certain consolidation of some banks last year, the surviving banks likely wrote down the losses on the loans they absorbed from the failing banks. Now, if they sell at a low market price, they may be breaking even or actually making a profit depending on how much they marked the property down when acquiring it. It could be a matter of whether they originated the loan or they got it when they took over a failing bank.
I think some of these investors are hedging that there will be inflation in the not too distant future, due to all of the stimulus money. So, even if the rent they get for the property pencils out to break-even, they think they’ll be able to sell for more than they bought it for if inflation goes up significantly. They’d rather have a commodity than hold onto cash.