More Foreclosures?

This chart makes it looks like foreclosures are on the rise lately, but don’t be too impressed – these monthly foreclosure counts are half of what they were two years ago.

There are still 10,504 properties on the NOD and NOT lists in San Diego County, and of the 193 that were on yesterday’s trustee-sale list, only 15 were actually foreclosed.  Interestingly, only 23 were cancelled; the other 155 (80%) were postponed:

San Diego County Trustee-Sale Results, Monthly:

Trustee Sales Down 60% Y-O-Y

From sddt.com:

Trustee deeds in San Diego County are down almost 60 percent from June 2011, and one local expert said that’s “really pretty amazing.”

Trustee deeds — the final step in the foreclosure process, transferring ownership from the delinquent borrower back to the lender or to a third party — were filed on 527 properties in June, 3.3 percent less than in May and 59 percent less than June 2011, according to the San Diego County Assessor’s Office.

Notices of default (NOD) — which initiate the foreclosure process by registering that a borrower is in arrears of payment — rose 3.2 percent from May to June, and 2.9 percent from June 2011 to June 2012.

Alan Nevin, principal at The London Group, said the county is headed toward normalcy in the foreclosure numbers, with one footnote: short sales are taking their spot.

“The foreclosure rate is really pretty amazing,” Nevin said. “If you go back to normal times, there were about 200 to 250 foreclosures. We are almost back to normalcy. There’s one footnote – the lenders are pressing the route of short sales instead of foreclosures because they lose less money.”

The county will wait a couple years to reach normal numbers again, Nevin said.

“We’re not out of the woods yet,” he said, because about 35 percent of sale closings are distressed properties. The number of short sales is going down, Nevin said, and will continue to as the underwater borrowers from 2005 to 2007 work through the system.

Nevin said he doesn’t follow notices of default because they “rarely” make it through the whole process to foreclosure.

The flow of transactions can be managed by the lenders and there’s still a “fair amount” of bank-owned properties, but the number can be manipulated, said Norm Miller, a professor at the Burnham-Moores Center for Real Estate at the University of San Diego.

“I think what’s going on is that the banks and lending institutions have become more proficient over the last year. They are able to go ahead and foreclose on properties and write off their losses,” Miller said. “The rate of foreclosures is going down – that’s not new, it has been going on for a while. There are [fewer] defaults and [fewer] foreclosures out there and that’s good.”

Miller said it wouldn’t surprise him if NODs stayed in the 1,200 to 1,600 range for the next several months and the county may reach “long-term equilibrium normal” in one-and-a-half to two years.

San Diego is better positioned than other parts of the country because the county did not over-build, said Nevin, and ran out of product in 2006.

“We’re not seeing any new production so the market will heal itself much faster than other places,” Nevin said. “The only thing stopping a massive surge in home buying in the county of re-sales is a lack of confidence in the economy.”

If the national economy saw job growth of a quarter million jobs three months in a row, Nevin said that could bring up the confidence level.

“Eighty thousand to 90,000 jobs every month doesn’t get anybody excited,” he said.

He expects the foreclosure numbers to stay down and “hover” around the area where they are now “and that’s fine,” he said.

CR had a similar post today about the Phoenix market:

http://www.calculatedriskblog.com/2012/07/phoenix-housing-sharp-decline-in.html

SD Foreclosing Filings

San Diego County Filings

Could a recent uptick in foreclosure filings mean more REO inventory later this year? 

Or just a fake-out to keep the short sales moving?

At least we can say that there’s been no waiting for us at Bank of America.  They listed 1848 Kerisiano for $519,000 just 10 days after the former owner vacated.  For us, this is the second BofA REO in a row that they turned around within two weeks of gaining occupancy, so hopefully that’s a sign of things to come (?).

But the three-year foreclosure trend has been a fairly steady downward slope – through 1Q12:

San Diego County Filings

More Foreclosures?

I’ve been hearing it over the last week or so (really it’s been over the last few years!) – people telling me that they’ve “heard” that more foreclosures are coming.  This nonsense is driven every year by RealtyTrac, a company that SELLS FORECLOSURE SUBSCRIPTIONS.

From cnbc.com:

More U.S. homes are entering the foreclosure process, setting the stage for a surge in properties repossessed by lenders this year. The number of homes that received first-time foreclosure notices rose 7 percent in March from the previous month, foreclosure listing firm RealtyTrac said Thursday.

That marks the third consecutive monthly increase this year and reflects stepped-up efforts by banks to take action against homeowners who fail to keep up with mortgage payments.  “We’re not out of the woods yet with foreclosures,” said Daren Blomquist, a vice president at RealtyTrac. “There are more batches of foreclosures coming through the pipeline.”

It would be great news for homebuyers to see more well-priced inventory hit the market, but don’t get your hopes up.  If there were increasing foreclosure filings around San Diego County, they would only get us back to where they were previously – an era which we handled quite nicely, thank you:

San Diego County Filings
San Diego County Trustee-Sale Results

The quote makes it sound like a 7% increase in new filings is troubling, and we know that filings are different than foreclosures (new filings in SD County were down 12% between 4Q11 and 1Q12).

If actual foreclosures rose 75% between 1Q12 and 2Q12, we’d be back to 2Q10 levels.

To paraphrase John Lennon, “Life is what happens while you wait for more foreclosures!”

Foreclosure Counts

CoreLogic, a leading provider of information, analytics and business services, today released its National Foreclosure Report for January, which provides monthly data on completed foreclosures, foreclosure inventory and 90+ delinquency rates.

There were 69,000 completed foreclosures in January 2012, compared to 80,000 in January 2011, and 65,000 in December 2011.

The number of completed foreclosures for the previous twelve months was 860,128. From the start of the financial crisis in September 2008, there have been approximately 3.3 million completed foreclosures.

“We are encouraged by the noticeable progress we are seeing over the last several months in the mortgage industry,” said Anand Nallathambi, chief executive officer of CoreLogic. “During the last several years the industry has faced enormous challenges working through difficult and complex issues. We are hopeful that these recent improvements are early signals of revitalization in the mortgage market.”

Approximately 1.4 million homes, or 3.3 percent of all homes with a mortgage, were in the foreclosure inventory as of January 2012 compared to 1.5 million, or 3.6 percent, in January 2011 and 1.4 million, or 3.4 percent, in December 2011.

http://www.corelogic.com/about-us/news/corelogic-reports-more-than-860,000-completed-foreclosures-nationally-in-the-last-twelve-months.aspx

Annual Count of SFRs foreclosed in San Diego County/% 3rd-Party buys

2009 – 8,692  (21%)

2010 – 7,455  (31%)

2011 – 6,313  (28%)

These numbers should keep dropping as we convert from foreclosures to short-sales.

Eschew

At the Super Bowl party yesterday a stranger asked how the market was, and I said “Great,….”.

But before I could get in another word, he fired the obligatory blast, “You realtors always say that”.  He then went on to tell me his prognostications, the main one being that he thought the higher-end was going to tumble further.

When conversations go that way, I usually shut up, and just nod my head quietly.  People have strong opinions about real estate, and realtors, and I’m not going to change them in one chat.

But if I would have said something, it would have been: “The banks would have to start putting more foreclosure pressure on the high-enders to trend downward in price.”

Foreclosureradar provides some nifty graphs to follow these thoughts. For those who might be thinking the same thing, here are the San Diego County foreclosure stats for December:

SD County Defaults by Sq. Ft.
SD County Defaults by Est. Value
Defaulters by Loan Balance

The high-enders are going to be more adept at finding ways to keep their house for as long as possible. To compare, in December 2010 there were 65 notices of trustee sale issued on loan balances over $1,000,000, and only 29 have been foreclosed.

Foreclosures in 2012

Even though this RealtyTrac report mentioned how foreclosures had dropped significantly in 2011, the latimes.com couldn’t resist starting off their coverage with these two scary paragraphs:

California and other states are likely to see an enormous wave of long-delayed foreclosure action in the coming year as banks deal more aggressively with 3.5 million seriously delinquent mortgages.

And experts said that dealing with the foreclosure process, from issuing notices of default to selling repossessed homes, is likely to push housing prices lower this year before the real estate market has a chance to recover.

There was no mention of pushing “housing prices lower” in the RealtyTrac report, so I wish they would cite their sources. The banks sure seem happy with the current pace of foreclosures in San Diego County – here are the last three years of activity:

San Diego Quarterly Counts

Anyone, including reporters, can get a preview of 2012 foreclosure activity by looking at the trend of default notices – and it doesn’t look like ‘enormous wave’ conditions just yet:

CA Filings

I guess we can expect the mainstream media to assist with market overshoot when they insist on puffing their reports with the same tired old stuff.

Here’s a new chart – the price/value results of trustee sales. Even though bidders are running up the purchase prices to 18.5% above the opening bids, on average, this report shows that they are still selling for 18.6% below market value. The dumps must be going out at bargain-basement prices, because the quality properties seem to get bid up to within 10% of market.

Winning Bids of Trustee Sales

Last Week’s Trustee-Sale Results

There were 127 SFRs on the A-list in North SD County Coastal last week; here are the results:

Scheduled NSDCC SFR Trustee sales, Nov 28th – Dec 2nd:

Trustee-Sale Results Number Listed on MLS in last year
Back-to-bene
6
2
3rd-party buy
2
0
Cancelled
15
5
Postponed
104
29
Totals
127
36

Only 28% of the properties on the auction list were trying to sell – the rest are either bucking for a loan mod, or going down with the ship – which category they’re in probably doesn’t matter much, because most will shake out over the next few years.

With only 6% actually losing their house (8 of 127), this will drag on a while. There are 355 SFRs on the auction list; the rolling gob of free-rent goo that, for the homeowners, feels like purgatory. Hopefully the servicers can speed it up for everyone’s sake!

Another Tsunami Scare

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:

http://bucks.blogs.nytimes.com/2011/11/30/foreclosure-crisis-isnt-even-halfway-over-analysis-finds/?ref=business

It goes into how low-income and minorities have been harder hit.

_______________________________________________________________________________

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. 

 

San Diego Foreclosure Counts

We thought the August blip of increased NOD filings might be a one-time event, but it looks like the servicers are keeping up the pace.  Hopefully it’ll translate into more trustee sales:

San Diego County Filings

Unfortunately, we know that a surge of NODs and about $4 will get you a cup of coffee, but at least the cancellations are moderating – though they are the dominant number:

San Diego County Trustee-Sale Results, Weekly

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