market forecast for 2006 to 2010
On the sales front, "what happens when the government handouts stop?" Well, an indication might be what happened to new building permits when the California $10k new home tax credit expired. The credit expired last month. SFR permits dropped nearly 30% from June to July after the credit expired.
Homebuilding permits filed in California in July fell significantly from June as a state tax credit for buyers of new homes expired, a homebuilders group said on Monday. The group also said the number of new homes built in the most populous U.S. state would sink to a record low this year. "Activity stopped as quickly as it started, which is bad news for housing and the broader economy," Rivinius said.
The defaults are like the Energizer bunny......
Mortgage delinquencies will continue to rise and set records the rest of this year in California, according to projections to be released today by TransUnion, one of the three big U.S. credit-reporting companies.
The good news from TransUnion's number-crunching is that, even in the tarnished Golden State, the trend may finally reverse itself by the middle of next year. Before that can happen, lenders must first work through scads of backed-up problem loans clogging their pipelines, F.J. Guarrera, vice president for banking at the Chicago data analyzer, said in an interview Monday.
So in the immediate future the percentage of California home loans that are delinquent at least 60 days or are in foreclosure is projected to skyrocket to more than 14% by year's end from 9.7% as of June 30, TransUnion said. In the region including Los Angeles, Orange, Ventura, Riverside and San Bernardino counties, the delinquency rate also was expected to hit 14% at the end of the year, up from 10.7% as of June 30.
As of June 30, 14.9% of residential mortgages in San Bernardino County were at least 60 days late. And in Riverside County, where boom-era home building reached a frenzied peak, 16.5% of home loans were at least 60 days past due. (OUCH! That even shocks me, 16.5% of Riverside's home loans are at least 60 days late)
By comparison, at the end of the first quarter of 2007, Riverside County's delinquency rate was 2.6% and San Bernardino County's, 2.3%.
The normal national rate for these delinquencies is 1.6% to 2%, Guarrera said.