Got Foreclosures?
Chuck Ponzi July 22nd, 2008
It’s no secret that almost every real estate blogger is talking about the unbelievable level of foreclosures. The mainstream media has latched on as well:
Foreclosures across the state surged to a 20-year high during the last three months, as tens of thousands of additional Californians lost their homes and more than 100,000 neared the brink.
Notices of default, the first step in foreclosure proceedings, rose nearly 125 percent from a year ago during the second quarter and trustee deeds recorded, which reflect the actual homes taken back, soared more than 260 percent, according to research firm DataQuick Information Systems.
But, this doesn’t even come close to telling the full story. Fact is, it isn’t the highest foreclosures in the last 20 years, which would imply that it was higher 21 years ago. Not so. In fact, these are the highest foreclosure statistics EVER.
Noone demonstrates that better than BubbleTracking in the update to the LA Times graph of foreclosures. Thanks OCRenter!
What’s noteworthy is the backstory to the image. The original LA Times article was somehow attempting to soothe buyers that the real estate market was healthy, in part because foreclosures were at historic lows.
Even more onerous than the picture above is another factoid of the story.
The number of defaults and foreclosures were the highest in DataQuick’s statistics, which go back to 1992 and 1988, respectively. Among homeowners who fall into default, an estimated 22 percent now emerge from the foreclosure process by catching up on their payments, refinancing or selling. That’s down from 52 percent a year ago.
That’s an incredible fact. In other words, 78 Percent of those entering the foreclosure process end up going through foreclosure. Considering that there is a record number of notice of defaults, we are ensuring years worth of upcoming foreclosures to push down prices. Recent report have showed that banks are swamped simply with the volume current in process and unable to expand to the need. Early in the bubble blogging world, more than 90% of those who received a notice of default were able to cure their delinquency due to quckly rising prices. Now, with prices falling 30% or more per year, one misstep is a lucky break for a would-be homeowner to simply walk away.
Sphere: Related Content
The original LA Times article was somehow attempting to soothe buyers that the real estate market was healthy, in part because foreclosures were at historic lows.
No, I don’t think that’s accurate. The original LA Times article (April 17, 2007) was “Foreclosure pace nears decade high.”
http://articles.latimes.com/20.....oreclose17
http://www.latimes.com/busines.....v-business
The original graph shows the curve doing an uptick in Q1 2007 to 11,033: not quite equal to the 1996 peak, but close. OCRenter chose to cut off the original graph at the minimum in 2006. But you can see that he left the original text saying “Home foreclosures are up sharply.”
You’re actually correct. I was thinking of this article, and confused the two:
http://pqasb.pqarchiver.com/la.....atl=google
I remember it because in 2005, only 6% of those entering foreclosure proceedings were foreclosed on (compared with 78% now)
Chuck