Fueled by Job Losses, Foreclosure Rates Remain High
Unemployment climbing toward 10% nationally and less than hoped for results from the government stimulus package and loan modifications are conspiring to keep the current home foreclosure rates high in the United States at the mid-year point in 2009. The year opened in January on a hopeful note with 274,399 properties in foreclosure across the country, down 10% from the previous month, but up 18% from January 2008. The brief improvement, however, seems to have been generated by temporary factors.
Fannie Mae and Freddie Mac imposed a moratorium on all foreclosures sales through the end of January and Florida imposed a 45-day freeze on such actions in the first part of December. While these actions and programs like the federal “Making Homes Affordable” program stemmed some of the tide, they did not turn it. By June, new figures showed that foreclosure filing dropped 6% in May over April levels, but were still at an historic high. May was, in fact, the third highest month for foreclosures on record with 321,480 homes embroiled in seizure proceedings, an increase of 18% over May 2008. Essentially, 1 in every 398 homes was in foreclosure and the rate was the third month in a row foreclosure numbers topped 300,000.
The areas hardest hit in 2008 with 62% of total foreclosure actions were Arizona, California, Florida, and Nevada. In California, a state that saw 34% of the foreclosure activity alone, median home values had reached 8.3 times the median family income at the height of the real estate bubble, a situation doomed for collapse when the job and credit markets began to implode. That situation changed little by May 2009 when Arizona reported 16,865 filings; Florida 58,931; California 92,249; and Nevada 17,157. Each of these areas was a former home building and real estate Mecca and thus a prime target for disaster when the recession struck.
In June 2009, the Phoenix area real estate market reported equally grim figures for its five major communities with Maricopa showing 305 foreclosures; Queen Creek 517; Glendale 587; Phoenix proper 2,882; and Mesa 925. In late June, the Office of the Comptroller of the Currency issued figures indicating that foreclosures in progress were up 22% in the first quarter of 2009 to 844,389 — an increase of 73% over the same period in 2008. While the fact that loan modifications for the same period were also up 55% was a hopeful sign, it was obvious that such actions were not staying ahead of the devastating effects of rising unemployment.
With home foreclosure rates remaining high in troubled areas, mortgage applications at increasingly low levels, unemployment rising, and the Dow refusing to climb much higher than 8,500 points, economic analysts are calling for more federal stimulus money. While the economy may no longer be in free fall, it is disturbingly stagnant on most fronts and still laboring to overcome job losses, consumer fears, and tight credit. The home crisis in America is not dominating the headlines at the moment, but foreclosures have not gone away and in fact have not appreciably improved over 2008 numbers.
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The federal stimulus money, different tax credit and other thing has helped the market to not collapse totally. Its take time to get the world economy on feet again and create new jobs. I see it over here in Spain that the buyer is slowly coming back and the price don’t sinking more.
Who wants to take out a mortgage in this climate? There will need to be some very good rates and incentives before numbers start to pick up. Until then, we have to ride it though.
I think you are right, we are not out of the woods yet. I think the media got tired of talking about it, but we still have some work to do to get over this.
It’s actually a great time for oppurtunity, through all this mess there is a TON of oppurtunity. Besides there were no fundamental basics invovled.
Las Vegas was (and is) pretty hard hit with foreclosed properties. People are buying them up a little faster than they are going into foreclosure the last few months. Hopefully that trend will continue here.
.-= Charles@Las Vegas Real Estate´s last blog ..Las Vegas Housing Market: Foreclosures Down, Sales Up =-.
We have done pretty well in terms of unemployment in Raleigh as well (when compared to other parts of the country). Still, it is disheartening to know that unemployment is still so high throughout the country.
The current administration is talking a lot about creating jobs. If they can do this many people may actually purchase these foreclosed homes. With job security and a little money in the bank, foreclosed homes start looking appealing. The tide could turn – but I guess it all starts with jobs.
I can confirm that there is still a shadow looming over San Diego with thousands of foreclosures that haven’t yet hit the market. We’re wondering where this “shadow inventory” has gone. Inventories are very tight, with only around 7,000 houses for sale in San Diego right now, versus more than 20,000 in the doldrums of late 2007 and early 2008. Rumor has it that the banks will let them all drop in September or October, which would be just like present-day bank management to do something like that. We’ve seen a genuine rebound in the San Diego real estate market in recent months and prices have been rising. There is heavy demand and low inventory. Buyers are competing hand over fist for foreclosure properties and overbidding most of the foreclosures for sale in San Diego that are priced in the super-conforming loan limit of $679,500. If the banks dump their inventory in bulk then it will undercut the confidence that has made the start of our recovery possible. I sure hope they release the foreclosure inventory in a gradual, sensible way.
.-= Geoff@San Diego Real Estate´s last blog ..San Diego Pros Discuss Foreclosures =-.
Here in the Sunshine State it is still pretty grim. Foreclosure is a huge issue as well as unemployment. Hopefully there will be some changes soon. We need it here.