In spite of government efforts to reduce the foreclosure rate in the U.S., the percentage of Americans going into foreclosure is accelerating: [Thanks G!]
April 29 (Bloomberg) — U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages and falling home prices left property owners unable to sell or refinance without losing money.
Almost 650,000 properties were in some stage of foreclosure during the quarter, or 1 in every 194 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of foreclosure data, said today in a statement. The number was 112 percent above a year ago. Nevada, California and Arizona had the highest rates.
The median U.S. home price may drop by a record 5.8 percent this year, Fannie Mae, the world’s largest mortgage buyer, said April 7. Congress, the Bush administration and regulators have urged lenders to renegotiate terms for borrowers so they can stay in their homes, easing the glut of empty houses. Such efforts may mask the slump’s extent by delaying foreclosures, RealtyTrac Chief Executive Officer James Saccacio said in the statement.
“This country needs a cleansing,” billionaire real estate investor Sam Zell, chairman of Equity Group Investments LLC, said yesterday at the Milken Institute Global Conference in Los Angeles. “We need to clean out all those people who never should have bought in the first place, and not give them sympathy.”
There seems to be a whole lot of "cleansing" going on:
Nevada led the nation with the highest foreclosure rate in the first three months of the year. Filings rose 137 percent to 19,595 from the year-earlier period. One in every 54 households there was in default or foreclosure.
California had the most filings at 169,831, and the second- highest rate at one for every 78 households. Arizona had the third-highest rate, one in every 95 households. Florida was fourth at one in 97.
The foreclosure rate was one in 110 in Colorado, one in 166 in Massachusetts, one in 202 in Maryland, one in 265 in New Jersey, and one in 550 in New York, according to the report.
California cities had six of the top 10 highest metropolitan area foreclosure rates. Stockton ranked first at one filing for every 30 households, almost seven times the national average. The city of more than 285,000 people claims to be California’s 13th- largest.
Riverside/San Bernardino was second in foreclosures at one for every 38 households. Bakersfield was fourth, Sacramento was fifth, San Diego was ninth and Oakland ranked tenth.
Las Vegas had the third-highest rate, one for every 44 households. Detroit ranked sixth, Phoenix was seventh and Fort Lauderdale, Florida, was eighth.
Sam Zell speaking at the Milken Institute. Sounds like a real clean guy. Buy low sell high, right Sammy. Whether a man is a criminal or a public servant is really just a matter of perspective.
“This town needs an enema” – The Joker
Zell is harsh. He’s also right. We need to clean out the folks who can’t afford the properties as quickly as possible. Quite dragging it out. It only delays healing.
Keith, You’re right! The people chasing the American Dream should have passed. I just don’t think a scum bag speaking at the Milken Institute qualifies as a lecturer to the non-chosen. This country has been stolen.
Here’s the downward spiral:
1. Economic activity will continue to decline until housing prices increase;
2. Housing prices will continue to decrease until vacancies decline;
3. Vacancies will decline until economic activity increases.
There you have it. Single, sole, only, inevitable remedy?
BAN HOUSING EVICTIONS NOW.
It doesn’t matter whether you oppose it or support it. Sooner or later, as I have said all along, there will be a ban on housing evictions. It all depends on how sado-masochistic Americans are. How sado-masochistic are you, reader?
Amendment!
Vacancies will NOT decline until economic activity increases.
Here’s my prediction:
The New Homestead Act of 2015 -
The Congress will pass sweeping legislation to allow homeless families to stake a claim on housing stock the Federal Government assumed as collateral during the financial bail out of 2008-2010. Since then these structures have languished on the market and deteriorated in condition. As such any person with legitimate family shelter needs will be allowed to choose the vacant home of their choice. Limit 1 home per family with $1 down. First come first served. Family must agree to live in such home, repair and renovate at no extra cost to the government and not sell, rent or lease said home for a period of 5 years after move in. Failure to abide by these requirements will result in forfeiture, fines and possible military service in our mideast engagements. After 5 years the homesteader my apply for an ownership deed from the Government subject to verification. Etc.
The other alternative is to plow them under like crops during the Depression. Moral hazard no doubt but a substantial chunk of the vacant housing stock may never sell and will deteriorate. Wages will not keep up with inflation in years to come. Many more people will not be able to afford home ownership.
Will Floplords be willing to take on this many homes as an investment and rent them out. Not if home values are not appreciating. How many will invest in a decrepit property, fix it up to attact renters without seeing rising equity and the ability to flip it in a year or 2? Not many investors have that kind of staying power. Plus all the hassles of being a landlord … You must pay the rent … but I can’t pay the rent. On and on. There will be a bottom but it could last a long time.
Bruce Orwell, veddy, veddy interesting. All this real estate crap AND unbelievable Greed(inflation). What the hell is going on? Just got back from WholeFoods’ latest conquest. Now there’s no olive bar, no fresh dolmas, etc. I went looking for the ULTIMATE potato salad and the clerk says that’s it, it just has been re-named. I tried a sample to be sure and exclaimed WOW! in between bites. $7.99/lb. She says “just like everything else.” If your cost of goods doubles from .35 to .70 do you have to go from 3.99 to 7.99? This is BS!
jryskmpr, if you ban housing evictions, then you will also ban anyone ever loaning their hard earned money to deadbeat americans. In effect you are changing the contract and saying to all that they can stuff it. We won’t meet our obligations and you can’t do squat about it.
Gee, I guess I could stop paying my mortgage and live for free…What a Countree!
I like how this housing crisis keeps feeding on itself. It should be as simple as reworking the loans for the mortgages and telling the lendee’s that this is it, you’ve got a great fixed rate, an affordable payment now good luck, walk now and/or wait for home prices to go back up if they ever do. Then if they can’t make do then foreclose. Problem is.., your dealing with bankers, idiots that only see one thing – dollar signs. With 18.6 million empty homes it’s pretty obvious that the industry is not trying to get people into affordable homes, the industry is trying to suck people dry while it looses it’s butt. It makes no sense, no wonder the economy is tanking. Back when the bankers started checking my credit score and places like transunion, equifax, and experian popped up I knew that no good was going to come of it. Look at the credit card, it’s just more poison to the common man or woman. My grandparents paid cash for everything all their life, owe nothing on anything. Went to get a small short term personal loan because of that one time all his investments just happened to be tied up in funds, and they said sorry can’t do it, you have no credit history, not even a credit card. They always used travelers checks when traveling! So he got one and thought it was pretty neat, but now he’s a deadbeat because he pays his credit card off in full every month. Then his identity was exposed because of the credit card company or whatever and he’s like wow, neat, what next?
Freemonster, I can top that one.
Back in 2004, I was looking around an AJ’s store in the Catalina Foothills north of Tucson. The store was quite busy, and people were buying things. Including AJ’s $8.00/lb. granola.
The resets of the Alt-A mortgages will be interesting between now through 2012. It seems the number one reason people walk away from homes is negative equity.
I read or watched something recently that indicated that Alt-A products were twice as likely to be stated income versus subprime, be twice as high as a loan versus subprime, and there is approximately 5 times as many Alt-A mortgages versus subprime.
Those statistics scare me since having good credit does not guarantee payment, especially, when one does not have any risk (100% financing) and is holding a depreciating asset. Add in zero assets and I think going back to the bank is almost a guarantee.
jryskmpr
“” How sado-masochistic are you, reader?”"
That’s a rather personal question, isn’t it?
Yos-
It’s not about sado-masochism. We are facing a plague, a pestilence of our own making. The plagues of the middle ages did not discriminate between rich or poor. That may be the difference this time. How to inoculate one’s self from the situation. My prescription:
1. Get out of debt and stay there.
2. Build some savings and diversify conservatively.
3. Keep your day job as long as you can.
4. Avoid buying real estate until the true bottom.
5. If all else fails buy glod, guns and head for the hills.
I’d love to know how many flips jryskmpr has. That’s the only explanation for his posts – I refuse to believe he’s as dumb as he comes off. No chance.
brucewho:
Great list. May I add to #2 by saying “save as much as you can, and don’t stop, no matter what the neighbors do”. Also, don’t forget to stuff some in the mattress, just in case.
Sandman,
Yes most definately cash on hand too!
My parents lived throught the great “D”. Credit was a fools game to them. You watch they’d say after I came home from a friend’s house and bragged about their things. They’ll be in the poorhouse soon enough my Dad would opine. Did’nt happen then of course but most of those kids needed college loans when it came time. I was fortunate for the free ride but had to go to state school. So what, still a credible education. And I started adult life out of debt! Same with my boy. That’s our offer.
Very important lessons. It’s called “Where with All”. Not many middle class folks have that anymore. I guess that’s a sign they ain’t middle class no more.
Brucewho,
Sounds like good advice/upbringing your folks gave you. My parent just had 6 kids so my upbringing was like a depression, but in a good way. I paid for my college and grad school but managed to not have any debt. I hope to give thta to my kids as well.
Brucewho,
Yes, buy gold, guns and head for the hills makes sense and if that doesn’t cut it…Dad, send Lawyers, Guns and Money..the s**t (slight edit-T) has hit the fan
Freemonster,
I sure do miss Warren (not B but Z). He had a very twisted way with lyrics. But however you rhyme the end game it scares the bejesus out of me. When I stated that it was synonymous with dancing on a grave. Who in their right mind wants that existence? How many can last in a world of Mad Max? Better route for BB and the Fed than Clamity Jane. (Igor’s word)
All of you are a bunch of idiots. Why is it the poor souls who thought they could refinance in a couple years being blamed after taking ARM it is not there fault that the real estate market tanked. It is very easy to blame people like this, instead of focusing on the corrupt mortgage companies making tons of money and not taking responsibility for their actions. What about the CEO of Countrywide nice severance he got.
Think about it an educate yourself!