September 15, 2014

The Misconception Is That People Can Afford It

The Press Enterprise reports from California. “Banks are still in the throes of taking back housing-crisis remnants in Inland Southern California, a new report from RealtyTrac shows. The 2,447 foreclosure filings across the two-county region in August were 11.6 percent less than the year earlier, but nearly half of the filings – 1,057 – involved notices of default. Industry analysts say the spike in initial mailings and bank repossessions are revealing ’shadow inventory’ that’s been in the background since the height of the foreclosure crisis.”

“To avoid a glut of foreclosure action, home-price devastation and possible market implosion, the filings were parceled out. Home take-backs also took somewhat of a hiatus when the California Homeowner’s Bill of Rights took effect in 2013. Foreclosure activity began to intensify in March. Bank-repossession notices then showed year-over-year increases every month through July. Total foreclosure filings in July rose for the first time after 31 consecutive months of declines.”

“‘If the 15 percent average decline had continued in January through August, we would have seen 52,056 total foreclosure starts in the Inland Empire during that time period,’ said RealtyTrac Vice President Daren Blomquist said. ‘Instead, we have seen 24,509 NODs (notices of default) during that time. That leaves 27,547 that we would have expected to happen, but did not happen.’ If only half of the 27,547 anticipated filings lead to a foreclosure, Blomquist said, it could take at least 11 months at the current rate for the Inland region to work through the backlog.”

The Pensacola News Journal on Florida. “For the 11th straight month, Florida led the nation in foreclosure rates. Florida had a total of 6,468 foreclosures in August, a 74 percent jump from July and a 25 percent increase from August of last year. In Pensacola, 307 housing units faced some sort of foreclosure activity in August, up 274 percent from July and 60 percent from August 2013. Pensacola Realtor Anthony Sessa said many of the foreclosed homes are ones realtors have known about for some time.”

“‘In the last 30 days, our inventory of properties which will eventually be on the market has increased greatly,’ he said. ‘It’s what we call shadow inventory, that we’ve all known about and were just wondering when we were going to get it. Our inventory in general has been average to low, so it’s the best time to feed this stuff out.’”

CBS Philly on New Jersey. “The shrinking casino industry is one reason experts say Atlantic County is top on the list of counties in New Jersey for home foreclosures. This week RealtyTrac released a report showing New Jersey foreclosure starts in August increased about 115 percent from the same period last year. ‘When these casino workers came in and bought these $300,00 to $500,000 houses they could afford them, but when they lost their jobs or went from full time to part time, they couldn’t make the payments,’ says Atlantic County Sheriff Frank Balles.”

The Denver Post in Colorado. “The number of foreclosures filed in Colorado last month showed the largest year-to-year increase since 2007, when the state was embroiled in the mortgage meltdown, according to a new report. The increase, a 57-percent surge when compared with a year ago according to RealtyTrac, is likely the result of state investigations into the practices of Colorado’s two largest foreclosure law firms. ‘The surge in foreclosure activity is not the result of a faltering economy but, instead, problems in the foreclosure industry that have delayed some (filings),’ said Chad Ochsner of Re/Max Alliance.”

Arizona Public Media. “After being on a downward trend for several months, foreclosure filings are rising in Tucson and statewide. A new report from RealtyTrac showed the number of homes that progressed a step in the foreclosure process went up by 16 percent from July to August. The number more than doubled from June to July, and is up by nearly half since this time last year. RealtyTrac Vice President Daren Blomquist said the recent jump in filings is due to more homes entering the foreclosure process. ‘Primarily, the increases in Tucson are coming from the foreclosure starts, properties just starting the process. Actual bank repossession of properties, the final stage of foreclosure, those are still going down,’ he said.”

The Fairfax Times in Virginia. “Fairfax County’s budget staff expressed some nervousness last week about declining sales in the local housing market. The number of active listings in the county in August was at a five-year high, as compared to the same month in prior years, and the number of homes sold was down about 12 percent from last year. David Versel, senior research associate at the George Mason University Center for Regional Analysis, said the local housing market is actually doing quite well, given the slow recovery of the job market. ‘Our job growth has been really weak this year,’ he said. ‘The fact that the housing market is even flat is positive.’”

“While soaring inventories can be a sign of trouble in the housing market, Versel said that the numbers had been abnormally low. ‘If it keeps going up over the next six to 12 months, then it is probably a cause for concern,’ he said. While still not back to where they were at the peak of the market, the median sales price for Fairfax County is now $478,000, compared to a low of $308,000 in 2009. ‘In that relatively short amount of time, prices have increased 55 percent,’ said Corey Hart, senior product manager with RealEstate Business Intelligence. ‘To think that houses would continue to appreciate at double digit increases year over year, it’s really not sustainable.’”

Seattle Weekly in Washington. “Everyone around here has been flooded with unsolicited offers. Walking around the neighborhood, we run into Stanley Perkins, who has lived in his house since 1973, when he bought it for $17,500. Asked to bring out some of the offers that regularly arrive in the mail, he heads into the house and comes back with carton after carton. ‘Dear Stanley,’ begins one letter from a repeated land suitor. ‘As I have stated in my letters to you recently, the land market may be in a bubble and 2014 could be the top of the market.’ The letter’s author goes on to say that he represents buyers who ‘are so eager to purchase your property’ that they have agreed to pay all of the usual commissions.”

From Bloomberg. “Canada’s ratio of household debt to disposable income approached a record high between April and June, underscoring the central bank’s concern about imbalances in consumer finances. Home sales and prices have shown unexpected strength as the lowest mortgage rates in decades spur demand. Forecasts for housing starts were raised yesterday to the highest this year in monthly Bloomberg News surveys.”

“With mortgage debt rising, the economy will be exposed when interest rates rise, said Andy Nasr, senior portfolio manager at Calgary-based Middlefield Capital Corp. which manages about C$4 billion ($3.6 billion), including real estate stocks. ‘The misconception is that ‘Well it’s ok because people can somehow afford it,’ he said at Bloomberg’s Toronto office. ‘They can’t.’”

Bits Bucket for September 15, 2014

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