Foreclosures make NY Times Front Page

[Restrain]

N.Y Times and, by extension, other major dailys, are reporting significantly higher foreclosure rates in some areas. They focused on Indiana at 2.2% of the mortgages at risk of foreclosure. That's a horrible ratio. It's blaimed on sub-prime lending, but it apprears to be a combination of layoffs and reduction in work hours.

I know it's bad around here in some areas, but it appears to have stabilized.

Roger

 

[Dee Dee]

Roger,

Prices here have stabilized, but the number of active listings is huge compared to a year ago.

More and more MLS property descriptions contain statements such as:

"Motivated Seller"
"Price Reduced"
"Make an offer!"
"Owner transferred"
"$1000 bonus to buyers agent"
"Owner will carry"
"$20,000 under last appraisal"
"Vacant...move right in!"

The writing is on the wall. It's been over a month since I had my last request to appraise a sale, and a growing number of those who are doing refinances have a sense of urgency like I've never seen before. It's as if everyone is finally waking up and realizing that if they plan on riding it out they had better trim off the fat quickly and be prepared to hunker down financially.

In a year or so I expect to see the bumper stickers proclaiming,
"Will the last one to leave Colorado please turn out the lights?"

 

[Steve Owen]

Sub-prime lending is a likely target. It's just good common sense that if you owe more than the house is worth you are more likely to walk away from it. That being said, foreclosure rates do not rise drastically unless there is also unemployment or at least, underemployment. Additional economic bad news could be a major problem for housing in many markets. Most of us are only a few months away from being homeless at any given time.

On the bright side: once the NY Times, and by extension, other major media players, are aware that there is a problem, the problem may be nearly over. When the average folks, who have their heads in the economic sand (or up something non-economic that I won't mention) most of the time start feeling like they need to hunker down, it might be time to buy, spend, etc. We appraisers have known there were economic problems in some housing markets for quite some time. Time flies when you're having fun, so it's kind of hard to remember for sure, but it seems like I was predicting economic cooling about four years ago; once those repo bargains start hitting the market, it might be time to start predicting economic improvement.

 

[Mike Garrett RAA]

Most of our foreclosures can be attributed to "over-financing". I am doing more liquidation and REO appraisals than any time in the past 10 years. Seven from Fannie Mae (opps make that eight, one just came in this evening) this month.

I would suggest to everyone who reads these posts, don't take someone else's word for what is occuring. Your market may be unique. Do the research yourself. I find it very easy to do on my MLS. Compare the first 10 months of last year to the first 10 months of this year. Look at average sales price, average days on the market, % of list price to sales price, and number of listings. Speak with authority...do not assume!

 

[Mike Garrett RAA]

Taking my own advice, I pulled some interesting stats!

This is my market, a community of approximately 500,000. Good new construction from more than a dozen major builders. Approximately 200,000 homes in the community with new construction accounting for more than 6,000 units per year.

January - October 2001 compared to January - October 2002

New listings ... 13,260 ... 15,098
Sales ... 7,454 ... 7,390
Avg Sales Price... $189,710 ... $197,040

As you can see, the listings are up; however, sales dropped by (0.9%) and the average sales price was up 3.9%. This is for existing homes only and did not include the nearly 6,000 new home sales. The average sales price of the new construction increased by more than 10% over the same period of time raising the over all rate to more than 6.5%

The median sales price was closer to $175,000 which indicates very affordable housing. Add to that the lowest interest rates in 37 years and BINGO....a strong market.


Now, I ask you.....since there were more listings than a year ago...does this mean the market is slowing?

Since the average sales price went up...does this mean the market is improving?

Since the price of gasoline and food is lower than a year ago, does this mean the economy is good?

Since the stock market has advanced nearly 27% over the past 90 days does this mean the market has bottomed out and we are in recovery?

Do liers figure and figures lie?

 

[Bemis Pownall]

Did a condo conversion today. Buyer paid $115k 2 years ago. Took 2 years to sell all the units(20+/-). The last few sold for $91,very recently.. All clones, all the same. Appraised value, not $115.. Reminds me of the '80's

:icecream:

That is all

 

[Red Blumenstock]

According to one article in USA Today by Thomas A. Fogarty, on 9/9/02,

"A record percentage os U. S. Homeowners are facing foreclosure and many more are falling behind on monthly house payments.

During April, May and June, 1/.23% of mortgages, about 640,000 were ion the forevclosure process. That's the highest rate in 30 years of tracking."

"The MBA survey also recorded an increase in homeownrers more than 30 days behind in scheduled house payments, but not yet far enough behind to face foreclosure."

Scary, Huh? However, the 4.77% of mortgage borrowers in foreclosure is behind the mid-1980's 6%- rate.

Red

 

[Mike Garrett RAA]

Bring it on Red.....I was always busy in the 1980s doing REO appraisals. I was down for a week with puter problems so this month is a bit strange....8 REOs out of 35 assignments so far, lets see, that is ahhhhhh nearly 23% of my work load. An interesting part of it is that Fannie Mae wants a full URAR when they have us appraise their REOs. Wonder how many had something different in the begining?

 

[Mountain Man]

Very good point Mike :!: It's also interesting who they call on when they really want the truth. :wink: Only then is it okay to call on those "conservative" appraisers. :roll:

 

[Steve Owen]

Finished a job for a LO (her house) before I left for vacation this morning. Her form did not indicate format, so I called her before I started. She said, "I want a 1004 because I want to know for sure; what you appraise it for will determine what we borrow."