Foreclosures are up in the Phoenix area- way, way, up.
Last June Doom looked at the Notice of Trustee Sales [NOTs] and Cancellation of Notice of Trustee Sales [CNOTs] issued in Maricopa County. [Phoenix area] Our data includes both residential and commercial property.
There was a record 2325 NOTs issued is June 2007. As of last Frday, there were 6668 NOTs issued in Maricopa County for the month of June, and there is still one business day left. At the height of the S&L crisis in the 1980s, the record month for NOTs was March 1988 when 1431 NOTs were issued. Here’s the historical graph:
[Note: Time period is from January 1955 to June 2008]
A Notice of Trustee Sale is not a foreclosure. A NOT is basically a warning indicating that you have 90 days to bring your account current, make other arrangements with the lender, or have your property auctioned off on the courthouse steps. If you sell, refi or renegotiate with the lender during the 90 day period, the NOT is cancelled. The average number of NOTs per month actually rose rather markedly from 1996 to 2003. However, there was also a rise in the number of cancellations as well, so the net result was a lower foreclosure rate than we are seeing currently.
Because a borrower has 90 days to try and avoid foreclosure, it is not possible to determine the number of foreclosures by subtracting cancellations from foreclosures in a given month. In some months of 2005, subtracting CNOTs from NOTs results in a negative number. However, by subtracting CNOTs from NOTs, you can approximate foreclosures. I refer to this number as "Net Foreclosures".
[Time period is from January 1975 June 2008]
Clearly, "foreclosure prevention" measures are not working. In fact, it appears by comparing NOTs with CNOTs per month that the percentage of properties that are entering foreclosure after receiving NOTs is probably at record levels:
[Same time period as previous two graphs]
There are several conclusions that can be drawn from this data:
One: Approximately 200 properties/day are going into foreclosure in Phoenix- seven days a week. [Again, this is commercial as well as residential.]
Two: As only a small percentage of these properties is being sold at auction, the fact that we are not seeing a corresponding spike in MLS listings indicates that many lender owned properties are not being listed.
Three: Foreclosure assistance programs are not working, as falling prices and economic conditions continue to put pressure on property owners.
Four: We are nowhere close to seeing the end of write-downs by mortgage lenders.
Five: Given that the foreclosure rate is accelerating, not moderating, it is safe to assume this thing still has a long way to run.
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It is a good thing you aren’t in Az anymore. Various chambers of commerce may get very “sad” at you. There is still a market blackout in my Hometown of Bozeman, MT. Zillow is all but useless now. They figured out that their handy charts and data was looking like the above. “Just anybody” could see what Nar sees. I don’t want to sound conspiracy theorist, but this is getting spooky. I thought “housing bust” not Grapes of Wrath.
Thank you! This is exactly what I have been saying. If you monitor any of the ttee sales there are houses that never show up on MLS…
So, I am curious as to what is happening with the houses that are now “owned” by the bank. Are the banks just holding them on the books? Are they selling them to “private” investors? Have they taken the loss on their books then turned around and sold them back to the originals owners for a better loan?
Whatisreality-
L and I spent some time looking at one Phoenix area neighborhood trying to determine how many REOs were unlisted. In the neighborhood we looked at, about 40% were not.
It was a large neighborhood, so the number of properties made it difficult to come up with a good flow chart, but it appeared to me that for the most part, they were cycling the properties through the MLS. Listings are allowed to expire, and another property is listed.
Letting them expire and sit awhile allows them to become “new listings”, so they don’t look like they’ve been sitting so long, and cycling them helps keep the numbers down.
It took hours to track the patterns in this one neighborhood, so I didn’t look at any others. I’m going to guess that the pattern is Valleywide though.
re: Maricopa County NOTs chart
Oh. My. G**.
Wow.
[Slight edit- but I completely understand the sentiment. T.]
NVMike-
This data is not easy to come by. I’d say that Clark County probably looks worse, but how does a graph do worse than a 90 degree turn?
I’m familiar with the “hockey stick” graph, but the express is inadequate in this case. What’s the opposite of a “dead cat drop”?
Hmmmmmmmmmm. Seems like more homes will be going into foreclosure than are selling each month. Hmmmmmmmmmmm. It’s amazing that some sellers still haven’t got it. Others are trying to sell for 30 percent less than what they paid without any success. Give it 6 – 12 more months. The economy will be in total collapse. Everyone will have lost half or more of the value in their 401k or stocks. Gas will be at $5 a gallon or more and the Greensapan era will be over. Now is the time to sit tight and wait for the once in a lifetime real estate buy.
Steve-
When you start to consider the losses in value sustained by homeowners and lenders in Phoenix, the mind boggles. It’s hard to see how lenders could withstand this sort of hit if Phoenix were the only down market in the nation. When you consider what is happening in FL, NV, CA and the midwest- it’s hard to see how any lenders are still standing.
I have a relative here (“Jim”) in Metro Phoenix who apparently has just recently acknowledged that his house is worth less than he paid in 2006. Jim now appears willing to bring cash to the closing table in order to sell it and be able to rent. But I doubt that he will lower the asking price enough to stand a chance at this. He bought the place for $320K, and it is “listed” fsbo on Zillow for $280K. Unfortunately, the house Zillows at $240K and there are comparable REOs listed in the $220s and dropping.
Jim made large bubble profits by purchasing on a new build behemoth in the same area in early 2004 and selling it in 2006. He sold a bit past the peak, but still pocketed around $180K.
Of course, he just had to buy again (before the first sale closed, BTW), although he downsized in size and price (thankfully). So, the second house is now about $100K underwater, which is more than his 20% down payment on a re-finance (he had to something with some of that bubble cash). If Jim walks away, he would still be a tad over $100K ahead in terms of his net housing bubble experience. Somehow, I do not think he will look at the situation with that positive spin. One more NOT coming soon (I’m guessing).
Many of these properties are aquired from the lender by hedge and vulture funds. I’m hearing 0.40 cents on the dollar or even less depending on the transaction size to buy a pool of bad properties.
Know that these buyers are working in the billion dollar range and may require time to ramp up their sales efforts.
I know of one fund that did this a couple of years ago and they are now in bankruptcy. It seems the vulture funds have mortgages too. LOL
A little off topic, but–
If you want to see where the building/development industry is headed, take a look at the relevant professions on Monster.
Do a search for Architect, Landscape Architect, Civil Engineer, and Land Surveyor positions. Look by State and Nationwide. Holy Cow.
Also here is a nice MLS mapping site:
http://idx.diversesolutions.com/Search/962/41
Four: We are nowhere close to seeing the end of write-downs by mortgage lenders.
Five: Given that the foreclosure rate is accelerating, not moderating, it is safe to assume this thing still has a long way to run.
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Six: The worst is yet to come in the credit crisis, and – given that the FED has already gone though half it’s $900 billion reserves – there is a real chance it may not be able to preserve the system as we know it.
And…
“Hmmmmmmmmmm. Seems like more homes will be going into foreclosure than are selling each month.”
I think this observation says it all in terms of what these NOT numbers mean.
Price drops are going to really accelerate the second half of this year (July through December). May retreat another 15% or more.
Where is the problem looks like a perfectly normal chart of the end of a bubble. Have a friend trying to get withen 10% of peak on a million dollar home in Phoenix. Buena suerte