Tom Ruff of The Information Market is THE guru for Arizona housing foreclosure data.
Tom thinks that residential foreclosures in Maricopa County peaked in August, although foreclosures will remain high for months.
Notice of Trustee Sale recordings hit their all time high in August, there were 7,271 notices recorded… We had thought that Notices would peak in August, we based this on median home prices peaking in the summer of 2006, and the greatest number of foreclosures occurring within two years of their loan origination. We have identified what we refer to as the foreclosure window, the 2nd quarter of 2005 through the first quarter of 2007. If you remember, it was March 2007 when the real easy money went away. If we look at the number of Trustee Deeds recorded based on loan origination dates, we see the following: 2004=1026, 2005=11,606, 2006=19,791 and 2007=4,574.
Let’s just assume for a moment I’m right, notices just peaked, what does this mean? Think of it as ground hog day, the next six months will be very much like the last six. Monthly notices will stay in the 6000 range, Trustee Deeds will be between 3,500 and 4,000, unless of course, someone shoots the damn ground hog.
Tom also found;
- Nearly 46% of all resale homes sold in August were sold by banks.
- The median sale price for non-REO’s was $229,900 and for REO’s was $156,000.
- Over 10% of all properties sold in 2006 have already been foreclosed upon.
You can subscribe to Tom’s Arizona foreclosure data at TheInformationMarket.com.
Obviously, foreclosures have been the driving force behind the rapidly falling real estate prices in Arizona. If Tom is right and August 2008 turns out to be the peak month for foreclosures, then we should see the inventory of lender owned properties listed for sale to start to taper off in several months. After that, home prices could stop falling… in some areas anyway.
{ 9 comments… read them below or add one }
Sam 09.17.08 at 4:31 pm
*False Bottom in NODs and Foreclosures Coming*
At the end of this article a reader points out why this false bottom is relevant for all states and not just CA.
http://mrmortgage.ml-implode.com/2008/09/15/mr-mortgage-be-careful-false-bottom-in-defaults-foreclosures-coming/
John Wake - Real Estate 09.17.08 at 5:26 pm
Sam,
Good to know about the technical change which will slow foreclosures in California.
The comment at the bottom of that post doesn’t really effect the foreclosures that Tom measures. He’s counting, I believe, the number of trustees deeds which only come from trustee sales. If the bank takes back the property at the trustee sale and then the bank sells it to a “jobber” or whoever, that would still count as 1 foreclosure in Tom’s numbers. It’s the trustees deeds he is measuring, I believe.
ks 09.18.08 at 1:08 am
With the current state of the economy?
Who has any real clue as to what is going on?
Right now, all bets are off.
Ken44 09.18.08 at 6:23 am
Gotta agree with Ks.
John Wake - Real Estate 09.18.08 at 6:35 am
Tom’s been wrong before, of course, haven’t we all? Nevertheless, I really respect his opinion. If foreclosures do down in September, that will give him a ton of credibility because I don’t know of anyone else forecasting that. If foreclosures don’t go down in September, we move on to a new theory.
Brian McMorris 09.18.08 at 7:37 am
Foreclosures will dry up when house prices stop falling and putting home owners under water.
Question for all readers: even if you have owned your home for 15 years (as have I), but have refinanced to take out some of the appreciation (as have I), would you continue to make your mortgage payments if your home fell in value to 25% below your refinanced mortgage? What if you lost your job or ability to make payments?
My point is that if housing prices do not stop declining soon, and the prices fall into the “meat” of the market, down to 2000 levels, lets say, the number of prospective foreclosures will continue to rise.
I have been proposing on this site that reversions to the mean trendline will often overshoot. For us engineers, it is a law of nature that process upsets overshoot before they stabilize. It is not hard to project prices that fall past 2003 levels all the way to 2000.
I am generally against government interference in markets. But the government created this mess (with lax regulation of the banking and mortgage industry and the artificially supported edifices called Fannie and Freddie), so now they need to help us get out. We need a massive program to stop price declines, by providing principal injectoins to homeowners, if necessary, and soon.
david wilson 09.18.08 at 4:02 pm
Round # 2 will be in the form of Alt-A’s, prime and OPTION ARM’S.
So much for the GURU status.
The above 3 are much more combined than subprime.
If you want more traffic, be more intelligent about the facts.
Cbass 09.18.08 at 10:25 pm
“I am generally against government interference in markets. But the government created this mess (with lax regulation of the banking and mortgage industry and the artificially supported edifices called Fannie and Freddie), so now they need to help us get out. We need a massive program to stop price declines, by providing principal injectoins to homeowners, if necessary, and soon.”
Could you explain this plan? I think you are saying the gov should give homeowners money to shore up their finances? I hope that is a joke I just did not get.
Why should joe taxpayer who can’t even afford his own house not get a “capital injection.”
Good to see your still hard at work with the blog John.
Thuan 09.20.08 at 2:01 am
I live in California, currently have a 2nd home in Phoenix. Due to recent depreciation of home price in the area, plus my subprime loan will change rate soon, I might have to let my property foreclosured. But I do not know how, and what would be the impact regarding credit, bank chasing etc… Would someone give me idea. Best regards.