Chuck Ponzi April 6th, 2005

Found another great article titled “California Foreclosure Activity at a Low” that shows how foreclosures are at an all-time low in 2004. A great qoute by the president of DataQuick, Marshall Prentice states: “There’s always a going to certain level of financial distress out there. People lose jobs, get divorced or have costly medical emergencies even in the best of times. Right now, though, because of increasing home values, virtually everyone can sell or refinance if they’re really in trouble” He also states, “We expect foreclosures to go up this year”
Is there a backlog of foreclosures out there?
Another interesting statement made:
“While foreclosure properties tugged property values down by almost ten percent in some areas eight years ago, the effect on today’s market is negligible.”
This lends even more credence to the belief that the bubble is fueled by easy credit, not lower interest rates, which by the way, didn’t hurt. If I were to lose my home after losing my job, easier financing (with no income verification), and lower rates, I could refinance my way out of a crisis by taking a chunk of money out and ending up with a lower payment (win for the buyer, but delaying the inevitable for the lender)
It is a general belief in lending that past experience is the surest predictor of future performance. Those with poor financial monitoring capabilities do not suddenly wake up after a refinance and say, “wow that was close, I had better change how I manage money”…no, they wake up and say, “wow, that was easy, I’m sure I could do that again!” And so we are here today… record low foreclosures, record high prices, record low cost to rent vs. buy.
All of this just gives me hope. I have great credit, a ton of money in the bank, and am biding my time to buy in. It will be a few years, though. It’s just a waiting game now.

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