The only value of this data below is trying to predict how home buyers and sellers will interpret it.
Because the accuracy is suspect. For example, the ‘homes in foreclosure process’ for San Diego is more than 20% higher than the 12,561 properties shown to be in default by foreclosureradar.com. But you could also wonder about the +7.5% increase in prices too.
Sellers are happy to ignore any bad news, but how about the buyers? Does the frustration cause buyers to settle after months or years, or do they get more determined? I think there is a little of both – in my experience the buyers are holding out more for the best quality, but once they find it, they’re willing to add a little extra mustard to the price if that’s what it takes to get it over with!
The media perpetuates the idea that more foreclosures means lower prices (whether it’s true or not). But with buyers squeezing for better quality, we’ll probably continue to see the best-quality homes getting bid up, and the inferior homes getting beat down.
Yeah, the source for these numbers is RealtyTrac again, and we all know how lousy their numbers are.
Below is a really good piece from Barons from Mark Hanson a well know mortgage industry guru. We got a long, long way to go. We all know it’s only a “pretend” market right now as banks let people sit in their house for 2-3 yrs payment free & those stats don’t show up in foreclosure #’s.
“[Hanson] lists the many woes that afflict the industry. High up among them is “effective negative equity,” which he defines as the inability to pay off a mortgage, plus paying a real-estate broker 6% and coughing up 10% to 20% of the purchase price as down payment on a new purchase. Mark reckons that a majority of mortgages fall into that unenviable category rather than the 28% commonly estimated.He also cites a humongous default, foreclosure and short-sale backlog overhanging the market. Since 2007, he relates, there have been only four million foreclosure completions and short-sale liquidations out of a probable 14 million to 18 million. That alone is enough to give you the willies.
Toss in unfavorable demographics, mounting energy costs, a miserable excuse for a mortgage market and inexorably declining home prices…well, you get the point. Housing is one of those festering sores on the economy that will be with us for quite a spell. And so long as it is, or until jobs grow more abundant and consumer income muscles up, the likelihood of a decent and sustained rebound for the industry seems a good piece off. And, we’re afraid, the economy’s recovery is apt to maintain its desultory pace.”
Mark moved over to the “let’s whip up hysteria” camp after other things he predicted didn’t come true.
The 14 to 18 million foreclosures don’t give me the willies. I think it’ll be far more than that – wait until it is obvious to joe six-pack that you can live for free for years without getting foreclosed.
I think that’s the only reason today that banks/servicers are foreclosing on anyone – just to give the appearance that at least some foreclosures are happening.