HousingDoom was born in June 2006 when this blogger had come to the conclusion that prices were overinflated and coming down in her hometown of Gilbert, AZ. The Arizona Republic reported yesterday: [Thanks M!]
Hundreds of more Gilbert residents lost their homes to foreclosure in 2007 than 2006, according to data from Information Market, a real-estate research firm.
In Gilbert, 550 houses were foreclosed in 2007 compared to the 40 that filed in 2006.
Out of Gilbert’s six ZIP codes, 85296 was hit the hardest in 2007 with 128 foreclosures.
In January of this year alone, 106 people faced foreclosure in Gilbert. During the same month in 2007, 18 residents had their houses foreclosed.
Realtor Bill Morris, who manages foreclosed properties for banks, said the market is now adjusting itself after inflated values in 2006.
That’s an increase in foreclosures of 1275% year-over-year.
There are those who accuse me of being "bitter" for having sold my Gilbert home in April 2005. [In 85296, no less.] I’ll admit, I was kicking myself for awhile afterwards, thinking I had made a mistake. I’m over it now. Really.
Well I live in 85296 (now 85298…) bought my 2100 sft home from Shea for 350,000 base price after moving here from Northwest. It is my first home purchase. Needless to say, Shea is selling same house model down 2 major streets from me for $283,000
Kalinaz-
I’ve spent some time “underwater” myself. Twice I was able to wait until prices came up again, once I had to bring $5K to closing. [I actually made a nice profit on my Shea house in Chandler. I was underwater on that one for awhile.]
Here’s hoping you do OK. : )
Even though I’ve been reading about the HB for a while now, I thought that number was a typo.
Wow. 1275% ? We’re in for some very bad times. Everywhere.
Zazzu-
That’s actually not the worst of it. M sent me the YOY rates for East Valley zip codes. Chandler’s 85226 fared best- they are up only 210%. Some other bad ones:
Chandler 85224 2,650%
Gilbert 85298 3,800%
Mesa 85207 1,467%
Tempe 85281 3,300%
Scottsdale 85251 2,800%
Remember too that these are the 2006-2007 rates- and things appear to be accelerating in 2008. That’s why we don’t buy talk of a “bottom” any time soon around here.
Wowee… that’s amazing even for this middle-aged cynic.
But yet, people called me a crazy Yaqui because I voted for Goldwater.
Depression in Phoenix, guaranteed. Unemployment well into the teens. Homebuilding completely disappearing as an ‘industry’.
Empty exurbs. So long Anthem.
Coming in a year or two: Makework projects stripping close in empty suburbs of their recycleables…
Schumpter’s Creative Destruction would approve.
http://www.freep.com/apps/pbcs.dll/article?AID=/20080307/BUSINESS04/803070329
Welcome to the party Gilbert.
BTW Yossarian, If you voted for Goldwater and your middle aged, does that mean you will live to 120 or so. Just sayin..
Here is an example of a Gilbert foreclosure where the bank is losing a big chunk of change. I apologize if I left this here once before. Sometimes that happens when one advances in years:
http://www.foreclosureexpert.info/2008/02/multiple-offers.html
Metro-
I may criticize the “creative math” of Wall Street economists, but I understand completely that the usual rules of mathematics do not apply when calculating age and need to be “adjusted” a little.
Mr. Twist and I will be celebrating our 26th anniversary in a couple of months. It should be abundantly clear then that I must have been a child bride of about 10 on my wedding day. [And with the margin of error, I might even have been younger.] I’m too young for any other plausible explanation. : )
Congratulations Twist,
Wifey and I will be celebrating 22 years next friday. I was not legally allowed to drink my champagne toast at my wedding.
Today is Friday 3/7/08. I may be on the 5:00 news channel 12.
Surak-
I won’t be able to see it. Can you put it on YouTube for us?
Surak,
Excuse my ignorance, on TV in what capacity?
Thanks.
Metro:
Hey, only 50!
I don’t think I ever actualy voted for Goldwater, as I recall, I only had one chance and I was pretty steamed at him for something.
And Indians hardly ever voted for Goldwater.. he did do some good work for folks on the reservations, but his party was the party of ‘Termination’ and nobody in their right minds forgets that.
Although, god it seemed like he was one of the topics at dinner for forever… when I was growing up! I only met him a couple of times. I think he thought I was a smart mouthed kid.
Nice ham radio setup, though.
Did I say 50? I meant, “My extremely late 30s” ….
I’ve been away from this site, but I have a question. I lowered the price on my San Antonio house back in January by 10%, and I had more showings than at any time since I listed back last June – like 5 or more every week in the dead of winter (versus 2 or 3/wk last summer).
I have been very realistic (resigned really) about my prospects, but my realtor said lots of agents had called her after the showings to say they would probably be submitting offers, but none seemed to follow thru. One finally did last week (wanting another 10% off, which I took a pass on). But in the last 10 days, I’ve had only 2 showings. Did something – like the other shoe dropping – happen while I wasn’t looking. At this point I feel safer financially staying put and I’m just going to let the clock run out on my listing contract, so please, no advice about cutting the price further. But I’m curious. Did it suddenly become impossible to get a loan? The offer I got made it sound like the lender could not be approved for a bigger loan because the house had been appraised at the lower value. My realtor tut-tutted that idea and said it was just a bargaining tactic. But I wonder if at long last the banks are getting serious about appraisals. (When I bought this place in 2004, I offered $165K with the asking price being $180K, but the initial appraisal was only $150K. It took nothing to get them to revise the appraisal to $165K).
I really have an eerie feeling about the economy at this point, and I wonder if the average American is finally pulling his/her head out of the sand.
TC-
I’ve been hearing that pendings and activity is up. Buyers have heard there are deals out there, and they are looking– but sales in San Antonio in January were at their lowest level since January 2004.
It is tougher to get a loan now, depending on the type, and anecdotally I’m hearing the lenders have swung the other way on appraisals.
It’s hard to know if it’s that buyers won’t or can’t, but either way, I expect sales to be lousy this year- even in Texas.
Surak will be on TV advising the borrowing Federation to make peace with the Klingon mortgage lenders.
Thanks for your take on the situation. I can’t wait for day I can leave the house with dirty clothes on the floor, dishes in the sink, and an unmade bed.
Thanks for the blog.
As I’m sure you and your audience well know, you were very wise to get out of the market when you did.
I also thought the prices couldn’t last, but what I failed to realize was that people buying at market value for regular home loans — not sub-prime, not condo — would also be affected by the market correction. Shame on me.
I need to move, not because I’m behind in payments or anything like that — I just got a better job in another state.
This might sound like a radical reaction, but at this point I feel that if I get out of this situation somewhat financially whole (break even or take a management loss), I never want to borrow money again, not even for a home.
Homes should be homes, not investments; investments are for money you can afford to lose, not for money you are borrowing.
I’m prepared to face whatever happens, of course. I made my bed and I’ll lie in it. But it’s really amazing how fast and hard this has all happened. At least to me.
oops. on edit:
- manageable loss, not management loss.
While high housing prices are definitely “doomed” in Gilbert, AZ and elsewhere, I will step in to say that the foreclosure jumps/percentages really can vary widely. The number one city/zip in a state will often change five, ten, or more spots from one month to the next. Nevertheless, it is interesting stuff.
A 46 year-old could have voted for Senator Goldwater in 1980.
AuH20 for President ‘64 would obviously require 16 more years.
Surak, is your piece linked on this page?
http://www.azcentral.com/12news/
Yep its bad – but not as bad as this statistic makes it seem. 2006 foreclosures would be artificially low, as the boom had just hit, and those suffering finacial setbacks (lost jobs, high med bills) would have just cashed out and sold. Plus there is a long lag time between financial trouble and foreclosure. You need to have several months late or missed payments, then another several months of proceedings. 2007 reflects the declines in 2006 and onward. Additionally, those in 2007 saw the trend in home prices, and realizing that a quick recovery wasn’t inorder, combined with bad finances, let the house foreclose. 2008 & 2009 will be rough, as mortgages reset.
Russ, I interpreted it as the presidential run but you are right about the senatorial elections.
tc:
There was indeed a jump in buyer traffic and sales in early February. The par rate on a 30 year fixed FNMA loan no points hit 5% for one day which may have contributed to this as there are some deals out there to be had if you are in a moderate market. Since then the rates have risen as concerns over the falling dollar and illiquidity in the finance (not just mortgages) market increased. I think the one day rise in mortgage rates was the third highest in 30 years. Loans are still available, but at conforming lending standards. There was a jump in pending sales in February, something I am sure the clowns at NAR will be touting next month when this indicator is compiled on a national basis. However, I think many of those pendings are falling through or being extended due to financing difficulties as sales are not increasing on a seasonally adjusted basis.
You gotta know when to hold them
Know when to fold them
Know when to walk away
Know when to run…
Kenny
TC,
My brother works at a wholesale lender, so, I keep an eye on them. They have jumped about 1.25% since late January. That could be a reason the buyers have dissappeared. If the cost of borrowing money goes up roughly 20-25%, I would imagine that would have an effect on demand.
BTW, I am living proof. I live in the San Antonio area since Sept 2007 and am renting. I would like to buy this summer, but, if the math doesn’t pencil out, may have to wait for a little while. From my tracking of the market, the lower priced homes and REO sales are leading the market lower.
If I wasn’t clear, I was referring to fixed 30 year and 15 year mortgage rates.
tc (#15) -
Yes, that’s the sound of the trench-mortar under all the artillery. What happened was the spread on agencies suddenly widened to levels not seen for about 22 years, and an anonymous Treasury Dept spokeswoman disclaimed the government’s implicit guarantee on senior GSE debt. Then Jim Cramer suggested (thanks for the tip, twist) that FNM and FRE could go to zero (that’s a signal to Paulson to contradict that spokeswoman — like now!)
Maybe it’s just a temporary glitch because hedgies like Carlyle are dumping agencies because they can’t dump anything else, but there is now a real possibility that even the conforming mortgage market will simply stop until Congress nationalizes Freddie and Fannie.
About $6 trillion dollars worth of MBS paper is being guaranteed by the capital of two companies whose stock price has dipped about 30 percent in the last month. It’s like AllenM says: “Someday this war’s gonna end.” America’s sovereign debt is a lot bigger than Congress thinks, and the war never was affordable.
Twist,
I was out walking with my sister and News Channel 12 interview us concerning the negative neighborhood effects that foreclosures will have on residences/neighborhoods. It is on AZ Central.
“Surak will be on TV advising the borrowing Federation to make peace with the Klingon mortgage lenders.”
Agnostic, it sounds like you are a Star Trek fan. You know I am.
Nothing was ever affordable. We were just told it was and fooled ourselves into believing so. Live for today and borrow away. Tommorrow is another day. Well tomorrow is here early. (We just lost an hour)
This is an incredibly massive problem. Are any of the precriptions reasonable, realistic or even workable? It will be as it will become. Most people have no idea how dire things really are.
We have been steaming along on the Titanic. Then bump. No need to worry the captain is in control. Turns out only a very few life boats are available. Ask yourself “Do you feel lucky?” Better yet “Whose your Daddy?”
Twist, here is the link
http://www.azcentral.com/12news/news/articles/vacanthomes03072008-CR.html
Surak-
The link’s been added to the sidebar. : )
Thanks Twist
I have acquired a great deal of knowledge from your site that helped me mention a few items concerning the foreclosure crisis.
The AZ State budget ain’t faring so well either.
http://www.azleg.gov/jlbc/mfh-feb-08.pdf
It is definitely the most challenging market I have seen since entering the real estate market 7 years ago. When I entered – you breath on a mirror and you made 6 figures. I kind of like the weed out that is occurring. It’s darwinian – only the strong will survive.
Every time someone says we’re nearing a bottom, I just look at this chart.
http://bp3.blogger.com/_pMscxxELHEg/RxzD0s_7EYI/AAAAAAAABB4/ljDSXZhMG3o/s1600-h/IMFresets.jpg
Watching the RE debacle unfold is like watching a glacier calve icebergs. It’s slow, inevitable, and occasionally, spectacular.
Igor says