The loan type with the biggest jump in defaults are the prime loans. As a percentage of total loans the default rate is still lower but since most loans are prime that translates into a lot of defaults.
The best line from this article: "Freddie Mac estimates that 40% of the loans they have in foreclosure are on vacant homes. The borrowers don’t want a modification. Home prices have fallen so far that they will not see any equity for decades. So why pay?
Will the higher rates kill the party?
Interest rates took a big jump this week. They are currently sitting at about 5.5% for those with perfect credit and a DP. The scuttlebutt in the blogosphere is that this is going to kill the market. Refi's especially would seem to be hurt by this rise. I think most folks with reasonable credit and half a brain already have a fairly low rate. So a 5.5% refi may not help those families on the verge of affordability if they already have a 5% or 6% loan. Where as a refi at 4.5% might have made a difference.
One things for sure the higher the rates go the more pressure there will be on the prices. It also does not help those loan resets if the rates start to rise. That will lead to more foreclosures as payments adjust upwards. It's also likey to increase drop outs on sales that are curently pending. Since the loan process is taking so long these days loan locks will expire, potential payments will rise and people will back out.
It seems the Fed is losing control (what little they had). They Fed rate is already at zero, they were buying up treasuries yet the interest rates are still going up. It seems poor Ben may have run out of magic bullets. I wonder what he will try next....
Next news item, Mortgage delinquencies hit record levels
The Mortgage Bankers Assn. reported Thursday that foreclosures were at record levels, with 1.37% of all home loans nationally starting the foreclosure process during the first quarter of the year.
However, in California, Florida, Nevada and Arizona -- states where housing boomed the most and now has crashed hardest -- the rate of homes entering foreclosure was 2.45%, the trade association said.
"Those states account for about 46% of the foreclosure starts in the country and represented 56% of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts," the association's chief economist, Jay Brinkmann, said in a statement. "It is difficult to overstate the severe impact home price declines have had on mortgage performance in those four states."
Perhaps there is some consolation for California: It's not the worst state in terms of foreclosures.
In Florida, 10.6% of the mortgages "are somewhere in the process of foreclosure," Brinkmann said. "In Nevada it is 7.8%, Arizona 5.6% and California 5.2%."
In addition to the news above, over 12% of all residencial loans are delinquent at least one payment. 12%!
One things for sure the higher the rates go the more pressure there will be on the prices. It also does not help those loan resets if the rates start to rise. That will lead to more foreclosures as payments adjust upwards. It's also likey to increase drop outs on sales that are curently pending. Since the loan process is taking so long these days loan locks will expire, potential payments will rise and people will back out.
It seems the Fed is losing control (what little they had). They Fed rate is already at zero, they were buying up treasuries yet the interest rates are still going up. It seems poor Ben may have run out of magic bullets. I wonder what he will try next....
Next news item, Mortgage delinquencies hit record levels
The Mortgage Bankers Assn. reported Thursday that foreclosures were at record levels, with 1.37% of all home loans nationally starting the foreclosure process during the first quarter of the year.
However, in California, Florida, Nevada and Arizona -- states where housing boomed the most and now has crashed hardest -- the rate of homes entering foreclosure was 2.45%, the trade association said.
"Those states account for about 46% of the foreclosure starts in the country and represented 56% of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts," the association's chief economist, Jay Brinkmann, said in a statement. "It is difficult to overstate the severe impact home price declines have had on mortgage performance in those four states."
Perhaps there is some consolation for California: It's not the worst state in terms of foreclosures.
In Florida, 10.6% of the mortgages "are somewhere in the process of foreclosure," Brinkmann said. "In Nevada it is 7.8%, Arizona 5.6% and California 5.2%."
In addition to the news above, over 12% of all residencial loans are delinquent at least one payment. 12%!
Economists aren't very good at predicting the future
Economists aren't very good at predicting the future, and I'm only slightly better it seems. I was trolling through the blog looking at how the homes in some older posts had done when they sold, when I ran across this post. The post talks about a report by Esmael Adibi, director of Chapman's Anderson Center for Economic Research on the overall economy. You know, jobs, housing etc.
His predictions were woefully wrong. He predicted real estate would drop 21% in 2008 and bottom out at $258k in late 09. He did not see much happening in unemployment as he expected added healthcare jobs to offset losses in construction. Man was he wrong.....
Then I made my predictions. Mine were better, but even Mr. Pessimistic was to optimistic. I predicted we would drop closer to 30% in 2008 and another 10 to 15% on 2009 and that the median would bottom around $175K in late 09. I predicted unemployment would increase to levels higher than that of the early 90s.
How far off were we? Prices dropped north of 40%. So I missed by about 10% but the expert missed by 20%. For the median we will have to wait and see. But we are both obviously off. He is WAY off. The median for the entire IE is currently sitting at $158k I believe. It's still dropping and how much farther is anyone's guess. I don't think it will go much lower but then again I didn't think it would go this low.
On employment, the expert wasn't even in the ball park. How he could forecast no additional job losses in mid 2008 is beyond me. I think the village idiot could see them coming in mid 2008. I was much closer here, predicting losses higher than the early 90's. Unemployment peaked at around 12% back then. I think we are close to 13% currently.
Funny stuff to look back and see what we though last year.....
His predictions were woefully wrong. He predicted real estate would drop 21% in 2008 and bottom out at $258k in late 09. He did not see much happening in unemployment as he expected added healthcare jobs to offset losses in construction. Man was he wrong.....
Then I made my predictions. Mine were better, but even Mr. Pessimistic was to optimistic. I predicted we would drop closer to 30% in 2008 and another 10 to 15% on 2009 and that the median would bottom around $175K in late 09. I predicted unemployment would increase to levels higher than that of the early 90s.
How far off were we? Prices dropped north of 40%. So I missed by about 10% but the expert missed by 20%. For the median we will have to wait and see. But we are both obviously off. He is WAY off. The median for the entire IE is currently sitting at $158k I believe. It's still dropping and how much farther is anyone's guess. I don't think it will go much lower but then again I didn't think it would go this low.
On employment, the expert wasn't even in the ball park. How he could forecast no additional job losses in mid 2008 is beyond me. I think the village idiot could see them coming in mid 2008. I was much closer here, predicting losses higher than the early 90's. Unemployment peaked at around 12% back then. I think we are close to 13% currently.
Funny stuff to look back and see what we though last year.....
Prices by city
Here's DataQuicks price by city. Interestingly enough I see they have adjusted the Riverside county median down $1k from their earlier report. It was $180k and on this later report it's listed as $179k (dropping by the week......)
City......................Sales...Median...2008median...% drop
City......................Sales...Median...2008median...% drop
| Riverside County | 4,390 | $179,000 | $295,000 | -39.32% |
| AGUANGA | 2 | $125,000 | $277,000 | -54.87% |
| BANNING | 38 | $105,500 | $217,500 | -51.49% |
| BEAUMONT | 96 | $199,250 | $287,500 | -30.70% |
| BLYTHE | 4 | $187,500 | $190,500 | -1.57% |
| CABAZON | 8 | $42,500 | n/a | n/a |
| CALIMESA | 7 | $194,000 | $275,000 | -29.45% |
| CATHEDRAL CITY | 83 | $150,000 | $245,000 | -38.78% |
| COACHELLA | 62 | $140,000 | $235,000 | -40.43% |
| CORONA | 447 | $300,000 | $395,000 | -24.05% |
| DESERT HOT SP | 154 | $90,000 | $174,500 | -48.42% |
| HEMET | 271 | $115,000 | $193,000 | -40.41% |
| HOMELAND | 3 | $60,000 | n/a | n/a |
| IDYLLWILD | 7 | $220,000 | $233,500 | -5.78% |
| INDIAN WELLS | 23 | $500,000 | $830,000 | -39.76% |
| INDIO | 172 | $170,000 | $290,000 | -41.38% |
| LA QUINTA | 99 | $340,000 | $566,000 | -39.93% |
| LAKE ELSINORE | 215 | $170,000 | $285,000 | -40.35% |
| MENIFEE | 133 | $195,000 | $275,000 | -29.09% |
| MIRA LOMA | 41 | $276,000 | $416,500 | -33.73% |
| MORENO VALLEY | 458 | $135,250 | $235,000 | -42.45% |
| MURRIETA | 296 | $225,750 | $310,000 | -27.18% |
| NORCO | 30 | $394,500 | $450,000 | -12.33% |
| NUEVO | 9 | $140,500 | $241,000 | -41.70% |
| PALM DESERT | 145 | $278,000 | $354,000 | -21.47% |
| PALM SPRINGS | 125 | $210,000 | $238,250 | -11.86% |
| PERRIS | 237 | $136,000 | $226,250 | -39.89% |
| RANCHO MIRAGE | 52 | $355,000 | $537,500 | -33.95% |
| RIVERSIDE | 505 | $175,000 | $300,000 | -41.67% |
| SAN JACINTO | 159 | $130,000 | $220,000 | -40.91% |
| SUN CITY | 154 | $140,000 | $246,500 | -43.20% |
| TEMECULA | 223 | $257,000 | $333,000 | -22.82% |
| THERMAL | 3 | $171,000 | $85,000 | 101.18% |
| THOUSAND PALMS | 14 | $110,500 | $187,500 | -41.07% |
| WHITE WATER | 2 | $111,000 | $173,000 | -35.84% |
| WILDOMAR | 64 | $224,000 | $327,000 | -31.50% |
| WINCHESTER | 45 | $244,000 | $329,000 | -25.84% |
| San Berdu Co | 3,060 | $138,750 | $265,000 | -47.64% |
| ADELANTO | 91 | $84,500 | $179,000 | -52.79% |
| APPLE VALLEY | 169 | $115,000 | $207,250 | -44.51% |
| BARSTOW | 38 | $55,750 | $157,500 | -64.60% |
| BIG BEAR CITY | 24 | $132,000 | $257,500 | -48.74% |
| BIG BEAR LAKE | 34 | $262,000 | $329,500 | -20.49% |
| BLOOMINGTON | 50 | $136,250 | $220,000 | -38.07% |
| CEDAR GLEN | 2 | $63,000 | n/a | n/a |
| CHINO | 72 | $316,500 | $431,000 | -26.57% |
| CHINO HILLS | 76 | $395,000 | $455,000 | -13.19% |
| COLTON | 72 | $115,000 | $227,500 | -49.45% |
| CRESTLINE | 14 | $115,000 | $184,000 | -37.50% |
| FONTANA | 430 | $188,136 | $315,000 | -40.27% |
| GRAND TERRACE | 11 | $237,500 | $263,000 | -9.70% |
| GREEN VALLEY | 2 | $146,250 | $172,750 | -15.34% |
| HELENDALE | 21 | $140,000 | $260,000 | -46.15% |
| HESPERIA | 232 | $106,000 | $215,000 | -50.70% |
| HIGHLAND | 65 | $120,000 | $325,000 | -63.08% |
| JOSHUA TREE | 22 | $90,000 | $123,000 | -26.83% |
| LAKE ARROWHEAD | 33 | $260,000 | $437,500 | -40.57% |
| LANDERS | 4 | $67,500 | $65,000 | 3.85% |
| LOMA LINDA | 12 | $299,500 | $349,500 | -14.31% |
| LUCERNE VALLEY | 6 | $66,500 | $174,500 | -61.89% |
| LYTLE CREEK | 2 | $79,250 | n/a | n/a |
| MENTONE | 17 | $165,000 | $315,000 | -47.62% |
| MONTCLAIR | 31 | $215,000 | $350,000 | -38.57% |
| MORONGO VALLEY | 3 | $70,000 | $155,000 | -54.84% |
| NEEDLES | 6 | $46,500 | $53,000 | -12.26% |
| ONTARIO | 150 | $180,000 | $305,250 | -41.03% |
| PHELAN | 15 | $130,500 | $230,000 | -43.26% |
| PINON HILLS | 8 | $202,500 | $230,000 | -11.96% |
| RANCHO CUCA | 172 | $315,000 | $400,000 | -21.25% |
| REDLANDS | 44 | $200,000 | $322,500 | -37.98% |
| RIALTO | 158 | $133,000 | $240,000 | -44.58% |
| RUNNING SPRINGS | 2 | $111,500 | $180,250 | -38.14% |
| SAN BERNARDINO | 370 | $73,000 | $190,000 | -61.58% |
| SUGARLOAF | 13 | $140,000 | $142,000 | -1.41% |
| TRONA | 2 | $44,750 | $45,000 | -0.56% |
| 29 PALMS | 23 | $82,000 | $110,000 | -25.45% |
| TWIN PEAKS | 4 | $102,500 | $215,000 | -52.33% |
| UPLAND | 67 | $379,000 | $450,000 | -15.78% |
| VICTORVILLE | 376 | $111,500 | $222,000 | -49.77% |
| WRIGHTWOOD | 5 | $290,000 | $137,000 | 111.68% |
| YUCAIPA | 51 | $222,000 | $287,000 | -22.65% |
| YUCCA VALLEY | 49 | $95,500 | $154,500 | -38.19% |
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