Hat tip to SM for sending this along from the nytimes.com: – this is the beginning of article:
A new analysis suggests that the tide of home foreclosures isn’t going to recede soon.
The report from the Center for Responsible Lending, “Lost Ground, 2011,” finds that at least 2.7 million mortgages loaned from 2004 through 2008, or about 6 percent, have ended in foreclosure and that nearly 4 million more home loans (roughly 8 percent) from the same period remain at serious risk.
Put another way, “The nation is not even halfway through the foreclosure crisis,” says the report, which analyzed 27 million mortgages made over the five years.
Read the rest here:
It goes into how low-income and minorities have been harder hit.
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Looking at the recent history of SFR foreclosures in North San Diego’s Coastal region, you’d think that there would need to be a major increase of foreclosures to change the market.
From foreclosureradar.com, here are the SFRs foreclosed in NSDCC between Jan 1 and Nov 10:
2007: 132
2008: 251
2009: 293
2010: 336
2011: 294
The MLS shows 2,243 closed sales this year, so even if the foreclosure activity doubled (or short sales ramped up), we should be able to endure it. But if there was additional turbulence, it would be more likely that the banks/servicers/fedgov would just drag it out longer, rather than flood the market.
Hi Jim
Just read.
41% of San Diego Mortgages in Negative Equity or less than 15% equity hit a news story today.
I feel we all need to be more forward thinking with the view of real estate. Foreclosures may have subsided for now but where is the source of capital for $600,000 + homes that need 20% down?
I can not figure how buyers can move up from a condo or small residence to buy $600k or more if buyers have less than 20% equity in a $400,000. As they say.. “Show me the money”.
Basic logic states. With 20% equity you have $24k (6% )for a realtor , moving costs $16k(4%), and $80k ($120k DP -$40k from sale) saved for down payment to buy up to $600k . You can move up assuming the buyer saved $80k in the worst recession in 80 years and can qualify ?
Don’t you agree with this logic?
I started reviewing Corelogic and they came out with a story today
41% of San Diego Mortgages in Negative Equity or less than 15% equity.
I do not know what the 20% figure is.
CoreLogic released negative equity data today showing 28.3 percent, of all residential properties with a mortgage were in negative equity and 5.2% had less than 5 percent equity, referred to as near-negative equity, in the third quarter. Together, negative equity and near-negative equity mortgages accounted for 33.5 percent of all San Diego residential properties with a mortgage nationwide in the third quarter.
http://www.corelogic.com/about-us/researchtrends/negative-equity-report.aspx?WT.mc_id=2011+03NSS-P001-NEGATIVE+EQUITY_crlg_1e_ner_3_111129#
When they reviewed the 15% equity the number increased to 41%
The defined Negative equity as ……….often referred to as “underwater” or “upside-down,” is the condition in which borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.
Something to consider.
Nice find
I read the story and it also brought up the fact that 69% of the borrowers have above average interest rates and they can not refinance. Also that 60% have LTV of 131%
I pulled the Q2 2010 corelogic dataand the negative equity or and 5% near equity went from 35.2% in 2010 to 33.5% in 18 months. Seems only a 1.7% improvement in 18 months.
I do not know what that means but it is not great.
Still Surfing,
You should go try to buy a house today.
You can spew all the statistics you want, and yet it doesn’t translate down to street level. Livinincali said yesterday it’s just a matter of time, but is it?
I don’t know – a previous comment today about this being rigged from the beginning looks more and more feasible, and we may never clear – you should consider that among the possibilities.
Here is my statistic. I am tracking this week’s auction list for NSDCC SFRs. It started with 58 on the list, and so far six have been foreclosed, with one day to go.
Jim
Thanks for the stat.
Are you saying that the banks are chosing to only foreclose on 6 or so and not to foreclose on the remaining homeowners in default?
Are the Banks continuing to just keep pushing the foreclosure dates back again and give these homeowners more free rent? How long is it 1-2 years?
If so I guess there is a positive. This does increase consumer spending as these homeowners in default have more discretionary income allocated to spending across all market sectors(clothes, restaurants, cars etc) rather than to go only to the bank.
This makes sense.
Now I know why I can not get a table for two anywhere in CV or DM on a Saturday night without a reservation.
So do we have any idea what the ratio of home purchases vs ATM borrowers makes up that 41%? What percentage of mortgaged SD County homes actually changed owners during the bubble?
I’ve come to realize that it’s usually pointless to talk about debt problem or a loss of wealth. People just don’t want to hear it and because it hasn’t happened since the great depression it won’t happen. That’s fine with me. I personally wouldn’t let it cripple your decision making process. A debt default at a global level is going to hit everyone whether your prepared or not. Might as well enjoy life now. Just be careful with how much debt you take on and look at housing as a place to live, not as an investment that’s going to pay off in the future.
Don’t buy a house because it’s going to be worth more in the future or because you think it’s a good hedge for inflation or whatever economic reason you come up with. Buy it because you love it, buy it because it makes you happy, buy it because you plan to stay there a long time. I think the days of buying to build equity and move up are done for a generation, but I could obviously be wrong. I’m not Nostradamus, just my humble opinion.
Agreed, big events that affect all aren’t as scary as the personal ones like losing your job or spouse.
Almost everything makes sense if you look at incentives, even if they are out of whack. During the boom the incentive was for people to purchase a house for almost any price as you could so for not only zero down and a miniscule teaser rate, but be paid at closing! People acted “rationally” given the set of incentives at the time.
During the bust the incentive is now for the banks to trickle out foreclosures at a rate eqaul to or slower then their ability to offset REO losses with overall earnings gains in order to maintain tier one cap ratios, and that is precisely what they are doing.
Booty Juice
Good point on incentives. I agree.
It seems if banks are borrowing at near zero their decision is whether it is better to hold a home(asset) on the books or sell it and acknowledge the loss?
If the bank has a $1mm home(asset)with holding costs of $5,000(.5%) or realize a loss on the books at $350,000 when they foreclose?
Since the the foreclosure reduces that banks capital in a time when capital is needed then what is the incentive to foreclose?.
Also if the cost of money is .5% on the $1mm asset(Home) it would take 70 years to out weigh the holding cost.
So why foreclose now?