"We Used To Sell Homes In A Day, Now 50% Of Our Sales Are Foreclosures"

Bank repossessions (that’s when not even the bank can sell your house) are up 48% from a year ago, as falling house prices trapped borrowers in mortgages they couldn’t afford, says Bloomberg.

One in every 483 U.S. households either lost the home to foreclosure, received a default notice or was warned of a pending auction, RealtyTrac said. That was the highest rate since the Irvine, California-based company began reporting in January 2005 and the 29th consecutive month of year-over-year increases. Nevada, California and Arizona posted the highest rates in the U.S. and New Jersey entered the top 10.

“It’s definitely a different kind of market than what we got used to a couple years ago,” said Devin Reiss, owner of Realty 500 Reiss Corp. in Las Vegas. “We used to sell homes in a day. Now 50 percent of our sales are foreclosures.”

The vicious cycle of foreclosures depressing home prices and falling home prices leading to more foreclosures continues…

Right now, lenders are afraid to lend and buyers are afraid they’ll be under water in a year, so unless something dramatic happens we’re going to continue to see the trend go in the wrong direction,” said Rick Sharga, RealtyTrac’s vice president of marketing.


Foreclosures Rise 48% in May as Repossessions Double (Update2)
[Bloomberg]
(Photo: amyadoyzie )

Comments

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  1. opfreak says:

    wow, they’ve been tracking numbers since 2005. Talk about histroical data

  2. jscott73 says:

    5 years up, 5 years down…

  3. Sinflux says:

    God I wish I had some spare cash right now.

  4. headhot says:

    Too bad they didn’t track the numbers on the loan applicants’ W-2s. NINA loans indeed. The banks got what they deserve.

  5. Trai_Dep says:

    Meg, I think you need to add a number between “sell” and “homes” in the headline. Well, or the source article does. :)

  6. socalrob of the 24 and a half century says:

    Im 25 with a decent size savings for a down payment. At least 5-10% depending on the house. With housing prices falling, when would be a good time for me to buy a house? Anyone have a website with suggestions?

  7. ludwigk says:

    @socalrob: Um, 5-10% is considered decent now? I know that we just got through a giant bullshit storm of people buying houses 0% down, and with a negative amortization, partial interest only loans, but isn’t 20% down the norm for the industry?

  8. GearheadGeek says:

    @ludwigk: 10% down in SoCal would be a pretty big chunk of change, unless the prices have gotten down far enough to be within sight of being in touch with some semblance of reality.

  9. mac-phisto says:

    @socalrob: well, depending on your income (& programs in your state), you could qualify for an fha loan program.

    to be perfectly honest, the best places to track foreclosures & bank-owned properties are your local newspaper (for auctions) & your bank (to see if they’re unloading any property).

    some realtors can also get you the “inside” listing for these properties, but YMMV there.

  10. mac-phisto says:

    @mac-phisto: uhh….not necessarily your bank. you might want to try other banks in your area also.

  11. Gilbert Tang, Jr. says:

    @socalrob: My suggestion is to not buy one in SoCal, Socalrob.

    Unless, of course, you would like to buy a 2+2 condo in Encino, long, long, longtime home of Brendan Frasier.

    Pet friendly!

  12. Me - now with more humidity says:

    mac-phisto: not even close. Try websites like Ocwen, FannieMae or RealtyTrac for foreclosure deals.

  13. mac-phisto says:

    @Me: really? i was able to obtain listings of bank-owned properties at 3 different banks near me. hmm…maybe that’s a local practice?

  14. Me - now with more humidity says:

    Some local banks have them. But it depends on how wide a net you want to cast. Ocwen is a major liquidator for large banks.

  15. mac-phisto says:

    @Me: cool. i’ll keep that in mind for the future. i’m not too keen on realtytrac – i’ve found some of the information there to be less than reliable. i used them to search for homes when i was looking & didn’t have a whole lot of luck (not to mention the house that i bought, which was on the cusp of the pre-foreclosure/foreclosure stage never made it to the list).

  16. MrSpaz says:

    To anyone considering purchasing a foreclosure: I would like to stress that the term “BPO” and “appraisal” are NOT the same. A BPO is a Broker Price Opinion and is assembled by a real estate agent/broker (usually the one selected by the bank to list the property). An appraisal is a an opinion of value formulated by a real estate appraiser who is legally bound to act objectively and is forbidden from colluding with anyone to “set” the value of a property.

    Broker/agents are NOT under any legal obligation to act objectively when valuing a property and may allow personal bias to influence their opinion. The agent/broker may tell you that a pre-foreclosure or foreclosure property is selling “under appraisal” or is “thousands below value.” They may even present the BPO as proof of this claim. While it is possible that the broker remained objective and considered all salient features (both positive and negative) when preparing their opinion, keep in mind the line of work brokers are in and their vested interest in the property. Certainly many people here know that brokers will try to soften the blow and talk up a property (ever heard “handyman’s special?” How about “needs TLC” or “great starter home!” All of these synonyms for “it’s a wreck.”). Since the broker’s genuine objective is to inflate their commission, you can probably guess what sort of bias might be present in a BPO.

    In the end, you are the only party in a real estate transaction that will act in your best interest. Never rush into a deal. Always do your research beforehand, and don’t act until you’re confident in your results. Anyone paid on commission or from the proceeds of sale *is suspect.* They want to get paid and (unfortunately) are often willing to steamroll people to get their paychecks. Speaking as an appraiser, I urge you that if you’re going to trust anyone, let it be a state-licensed independent real estate appraiser who is paid independently of the sale (and do NOT let your agent/broker pick an appraiser for you. It’s a sad thing, but there are what we call in the industry “target shooters” that will prepare bad reports for their broker friends, usually in exchange for illegal kickbacks).

  17. Jevia says:

    Be sure and know what your budget is for your “total” mortgage payment (that’s including escrowed funds for taxes, insurance and PMI if you don’t put 20% down). You can put less than 20% down, but then you usually have to buy PMI (private mortgage insurance) until you have at least 20% equity in the house.

    Don’t let anyone talk you into going above your budget. That’s how a lot of people got into trouble. Even with a fixed rate, your payment can increase if taxes and/or insurance rates go up (mine just did by $60 per month, but being well within our budget, we’re fine).

  18. TechnoDestructo says:

    “so unless something dramatic happens we’re going to continue to see the trend go in the wrong direction”

    No, we’re going to continue to see the trend go in the RIGHT direction. People were talking for what…two years…before this started about an upcoming “correction.” That is what is happening. Prices are being corrected. Mistakes are being corrected.

    Incomes have been stagnant for most workers, there was no way for most homes to sustain price growth. The prices were INCORRECT.

    (Shitty) houses were going up everywhere in response to the INCORRECT prices. So not only are you left with people who didn’t and don’t have the income to buy any more houses now than they did 10 years ago, you’ve got a lot more houses.

    Screw you, real-estate industry, you are not done suffering.

  19. BlackFlag55 says:

    Terrifically important read here …

    In a recent interview with the Telegraph (UK), George Soros told the paper’s economics editor that speculation “is increasingly affecting the price” of oil. He noted, “The price has this parabolic shape which is characteristic of bubbles.” Soros believes that real estate prices are going to plummet further. Stagflation is here. Oil prices are connected with the value of money, the state of productivity, and general economic expectations.

    It may be argued that Federal Reserve policy is responsible for a commodity bubble, just as Fed policy previously sparked bubbles in the stock market and real estate. Perhaps we are approaching the hour in which there are no safe havens because every haven has, in turn, been “bubbled.” Is the civilized world about to suffer the greatest, most total “correction” in economic history? As our civilization has lost its sense of reality, its taste for truth, recent economic growth may have been more fictional than real. We think there is money in our pension funds. We imagine that our homes are worth twice their previous value. We believe our stocks and bonds are worth holding onto. But thinking, imagining and believing in wealth doesn’t make it real. Perhaps we are on the brink of the greatest revaluation of economic values in all history. And it’s all connected to oil.

    [www.financialsense.com]

    The real estate bubble was in direct response to 9/11 … the financial damage done by 9/11 is impossible to calculate and the Fed responded with the only tool they have to weild … easy money and a lot of it. They commoditized a real estate bubble by design. Except the dollar didn’t stabilize and the excess of dollars drained into Congress which neede vast tax revenues to pay for their suicidal borrowing. Those two forces collided in a spectacular fashion when suddenly there simply wasn’t enough money left to keep our institutions liquid. All the liquidity had been drained off.

    Ergo … no room left to manuvear and “save” all those millions of adjusting loans made to people who shouldn’t be holding notes for what they could not afford. Thus … massive defaults.

  20. ismacau says:

    Mr. Spaz…

    Tou have got to be kidding right? Ever heard of a SHORT SALE? It’s a sale where the seller owes more than the home can sell for. And lots of them have recent appraisals from licensed appraisers that aren’t worth the paper they’re printed on. Appraisers are paid just the same as brokers. They have a vested interest in homes APPRAISING for stated/desired values. I myself have a listing that the sellers refuse to drop the sales price lower than the price of their recent appraisal… yet theres no way on the planet the home will sell for the appraisal-it’s off by a $100k on a $400k home. Appraisers are licensed… but it doesn’t mean they’re ethical or that they have any clue about what the market is doing.

    $400 and I can buy an appraisal for whatever value I need… Besides… when was the last time you heard of an appraiser losing their license over a inaccurate valuation report? I’ve never heard of that happening. Ever.