Foreclosures Rise 24.5 Percent Nationwide

[phk]

Foreclosures Rise 24.5 Percent Nationwide
by Broderick Perkins

A nearly 25 percent increase in foreclosures last year, combined with slowing sales, softer home prices and higher mortgage rates reveal a housing market in the throes of change away from favoring sellers.

Foreclosure monitor RealtyTrac said the number of foreclosures nationwide was up 24.5 percent from the first quarter of 2005 to the fourth quarter.

"Over the past few years, we've seen historically low mortgage rates, consistently escalating home prices and steady, strong employment," said James J. Saccacio, chief executive officer of RealtyTrac.

"This has translated into relatively low levels of foreclosure properties -- particularly bank-owned properties. With interest rates rising and an apparent slowing of property valuations in most markets, we'll be watching closely to see if there's a material effect on the number of foreclosures in 2006," he added.

Along with higher foreclosures, existing-home sales set an annual record, but declined in December falling 3.1 percent compared to December 2004, according to the National Association of Realtors.

The national median existing-home price for all housing types was $211,000 in December, up 10.5 percent from December 2004, but down from November's $215,000 median, NAR also reported.

And the average of fixed mortgage rates for conforming 30-year mortgages rose for the fourth consecutive week to an average 6.24 percent by Feb. 9, according to Freddie Mac. A year ago the average was 5.57 percent.

Hardest hit by rising foreclosure rates during 2005 were Massachusetts, up nearly 200 percent; Connecticut, up 188 percent; Michigan up 170 percent; Virginia up 151 percent and Maryland, up 117 percent.

RealtyTrac's report includes properties in all three phases of foreclosure: pre-foreclosures, Notice of Default (NOD) and Lis Pendens (LIS); foreclosures, Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and real estate owned, or REO properties (those that have been re-purchased by a bank).

It's not just the percentages. Numbers are growing too and that's statistically significant.

Nationwide, the number of foreclosures during the first quarter were 188,122. By the final quarter that number had risen to 234,278. In Massachusetts, the foreclosures jumped from 616 to 1,843; Connecticut, 1,456 to 4,202; Michigan, 4,411 to 11,937; Virginia, 380 to 956 and Maryland, 667 to 1,448.

Washington, D.C.'s foreclosures rose fastest, 300 percent, but the numbers remain relatively low, 10 foreclosures during the first quarter compared to only 155 during the fourth quarter.

Still, for some regions, the trend is obvious.

"Overall, U.S. foreclosure numbers climbed steadily over the course of the year, with more new foreclosures reported in every quarter," said Saccacio. "This trend appears to be moving the real estate foreclosure market back to its historic levels."

The percentage of foreclosure increases don't tell the whole story.

Florida experienced a 29 percent decrease in new foreclosures from the first quarter to the fourth quarter, but accounted for more than 14 percent of the nation's new foreclosures in 2005. Foreclosures in the Sunshine State represented 1.67 percent of the state's households, RealtyTrac reported.

"Even with almost 850,000 properties entering some stage of foreclosure across the country over the course of the year, this represents less than 1 percent of all U.S. households," Saccacio said.

Likewise, No. 2 Colorado saw foreclosure decreasing 4 percent during the survey period, but the 29,630 foreclosures in 2005 represent 1.62 percent of the state's households.

Utah was third with 1.5 percent of that state's households entering foreclosure in 2005.

Texas, Georgia, Arizona, Indiana, New Jersey, Ohio and Tennessee also revealed foreclosure rates of at least 1 percent of total households.

[dazzleman]

Not surprising at all, considering the way home prices have gone through the roof, and the banks have come up with all sorts of 'creative' ways to qualify people for the financing necessary to buy homes they can't really afford.

I know several people in situations where they bought homes they really can't afford over the long run.  It's very worrisome.

Banks can always be counted on to be loose when they should be tight, and tight when they should be loose.  They're idiots.

[MODU]

A perfect "sky is falling" article.    Hopefully this triggers a sudden jolt in the housing market to drop home prices $20k.   

Yes, there will be people facing foreclosures on their homes because they over-extended themselves.  While this is unfortunate, this is what they get for spending outside of their means.  My realtor right now wants me to buy homes in the $300+ range, and buy right now . . . while I have to remind her than that there is no need for me to spend over $300k on a home that I will only "live" in on the weekends, and sleep in on the week days. 

[dazzleman]

A perfect "sky is falling" article.    Hopefully this triggers a sudden jolt in the housing market to drop home prices $20k.   

Yes, there will be people facing foreclosures on their homes because they over-extended themselves.  While this is unfortunate, this is what they get for spending outside of their means.  My realtor right now wants me to buy homes in the $300+ range, and buy right now . . . while I have to remind her than that there is no need for me to spend over $300k on a home that I will only "live" in on the weekends, and sleep in on the week days. 

Hah, I'd love to be able to get a nice home for $300,000. 

My first house cost $198,000 when I bought it in 1995, and I sold it in 2003 for $359,000.  Small, 3-bedroom, 1-bath ranch.  My current house cost $778,500 plus about $100,000 in renovations.  It's a 3-4 bedroom colonial -- 9 rooms total plus a playroom downstairs.  Bigger than I need, but in a great neighborhood with great property, and I think it is poised to appreciate relative to some of the other neighborhoods in the area because the land sizes can fit both a large house AND a good yard, in contrast to other nearby areas where large houses are being built on small pieces of property.  Also, a new train station is opening nearby in a few years, which could raise the value of the house.

But you're right -- brokers encourage buyers to spend more than they necessarily need to.  There's actually a whole boom-bust mentality to real estate.  When it's booming, people have the mentality that they'll pay anything, because it doesn't matter since increases keep coming.  Banks contribute by making it possible for people to buy houses they really can't afford, and they are dependent on future appreciation to 'rescue' them from this predicament.  If that future appreciation doesn't come for some reason, they're screwed, with a mortgage they can't afford and a house worth less than their mortgage.  Then, when the boom does come to an end, people don't want to buy because they're afraid values will keep falling.

[David S]

The numbers for Michigan are not surprising. House prices around here have declined in the past year. Jobs are still available, but are getting harder to find. The Michigan situation may be somewhat unique in that our economy is heavily dependent on the auto industry, which is on the ropes right now.

[True Federalist (진정한 연방 주의자)]

That's one great thing about the Midlands of South Carolina.  Cheap Housing!  You can get a nice already built 3 bedroom house in a nice ungated community (what used to be called neighborhoods ) for under $100K.

[TeePee4Prez]

That's one great thing about the Midlands of South Carolina.  Cheap Housing!  You can get a nice already built 3 bedroom house in a nice ungated community (what used to be called neighborhoods ) for under $100K.

Can't even get a rowhome in a subpar neighborhood for that here anymore.