Thursday, January 29, 2009

Going Parabolic


That chart only looks good if you work at NASA.......

From the LA Times

More than 236,000 homes were lost to foreclosure in California last year, topping the previous nine years combined, data released Tuesday show. And the number of borrowers who defaulted on their payments hit a record high of more than 404,000. (and that number would have been quite a bit higher had AB1137 not slowed the foreclosures in the 4th quarter!)

The wave of foreclosures, which began in early 2007, was initially triggered by falling home values and resets on adjustable-rate loans. But lenders and industry analysts say the trend is now being exacerbated by rising unemployment, which has shot up to 9.3% in California.

California was last hit by massive foreclosures in the early 1990s, when the state was also struggling with an economic downturn and rising unemployment. At that time, there were about 10 foreclosures for every 100 layoffs, said John Burns, an Irvine real estate consultant.

In this cycle, he said, there will be about 15 for every 100.

"The price declines have been more severe this time, and the job losses are looking worse," Burns said. "Consumers are more likely to give the keys back to the bank because they don't have anywhere to turn."

In California, the number of homes lost to foreclosure rose 180% last year compared with 2007, according to MDA DataQuick, a real estate data firm. It was the largest number of foreclosures since DataQuick began tracking them in 1988.

The number of foreclosures actually dropped this fall, to about 14,000 in November from about 25,000 in September. But that decline was probably a temporary blip due to a new state law that forced lenders to make more efforts to contact borrowers before foreclosing, and doesn't signal a reversal of the trend, said DataQuick analyst Andrew LePage.

Indeed, foreclosures rose 14% in December from November. And notices of default, the first step in the foreclosure process, also dropped this fall but had rebounded sharply by December.

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The word on the streets is that there's a BIG foreclosure wave-a-coming. I've read it in the nation media, I've heard it from friends in the banking industry and the real estate industry and Mr. Mortgage has just put a good post on the subject. AB1137 backed up the system, in addition many banks held off over the holidays, and they were already backed up before AB1137. I know from personal observations that there are truck-loads of empty homes that are not listed.

In addition to the current crop of foreclosures resulting from the bubble popping, the foreclosure crisis is now sprouting in a new area. Mounting job losses are causing another wave of lost homes. People that bought well before the bubble and were previously in good shape are losing homes from job losses ( A friend of mine in San Diego may lose his house of 10 years after getting laid off in Nov). Unemployment in Ca is getting very close to the levels of the early 90s. The national numbers, while better than Ca are the worst they've been in decades.

I'm really hoping this wave of REO's hit's soon. X and the family are ready to move on. Plus if I don't buy a house I will probably destroy my liver taking cruises........

11 comments:

Roger Roberts said...

Destroy you liver? X, you are the funniest dude ever!

Renee' said...

I hear you "X" - the fam here is ready to move as well - so much so that we have our financing in place, are packing up the house, taking pictures off the wall and buying bubble-wrap as though it were the hottest commidity since pork-bellies.

Come Feb 2nd (Monday) I am going to be in that MLS several times a day - hoping to see the mother-load of homes come rolling in.

Market said...

Waaaaaa! I needed my kaboom fix! Welcome back.

WunderPit said...

Ready to move as well...April-May sounds good :o)

golfer_X said...

destroy my liver is right. My onboard tab on that last cruise was higher than the actual cruise fare. $1300 for the cruise (for 2) and the onboard tab was $1500! That did include the tips and the excursions though. Usually I take my own Scotch with me but this time I didn't and boy did it cost me.....

FairEconomist said...

1500 for scotch! Even at cruise prices, that *is* a lot to ask of your liver.

vipertom1970 said...

why wait, if you see a house you like just low ball it.

golfer_X said...

"why wait, if you see a house you like just low ball it."

Oh, don't worry, I will....

Renee' said...

Went prepared to buy a home today - made 4 offers - who the heck nows what will happen....I can tell you though - very humbling.

Some of the homes I went into today need some MAJOR repairs and they are still listed pretty high as far as I'm concerned; just don't get it.

Several homes in Sycamore Creek (where the tax rate is a whopping 2.44%)that I went to were homes where the families fled right when the sheriff posted that note to GET OUT - yep, they fled like refugess.

We saw play stations, nice stero's, high end toys, Bo Flex's even prescriptions drugs just left behind. It's maddening to think that parents would just leave their kids' things behind, but then you feel that heartbreak knowing that a family lived there - it was their home.....it's like the Rapture took place - I'll tell you - I got a bit creeped out going into some of these homes.

This is truly more than a recession - this is a depression in a different scale...."X" blogs the truth - the carnage is not over yet thats for sure.

golfer_X said...

2.44% holy smokes. The CFDs (mello roos) are about $4k per year on top of the 1% right. What else is there?

Renee' said...

No - from my calc's - I think that's everything included in that 2.44%. The HOA isn't bad - the brand new elementary school out there - OMG - looks like an upscale high school campus (so at least those taxes are going for something)