Yet more housing bad news

[Pat K]

Foreclosures hit all-time high
Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on payments.
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By Les Christie, CNNMoney.com staff writer
Last Updated: March 6, 2008: 2:25 PM EST

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NEW YORK (CNNMoney.com) -- More home owners than ever are losing the battle to make their monthly mortgage payments.

Over 900,000 households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association. That figure represents 2.04% of all mortgages, the highest rate in the report's quarterly, 36-year history.

Another 381,000 households, or 0.83% of borrowers, saw the foreclosure process started during the quarter, which was also a record.

Additionally, the number of mortgage borrowers who were over 30 days late on a payment in the last three months of 2007 is at its highest rate since 1985.

"Boy, that was ugly," said Jared Bernstein, an Economic Policy Institute economist of the data.

"It's another reminder that anyone who thought we had hit bottom was wrong. This was a huge bubble, and when a bubble of this magnitude breaks, it creates a huge mess," he said." It could take a lot longer for the correction to work through the system."
Housing rescue: What you need to know

One reason it may take so long is that there seems to be no end in sight for falling home prices.

"Declining prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state," said Doug Duncan, MBA's Chief Economist said in a prepared statement.

The foreclosure rates for prime and subprime adjustable rate mortgages both more than doubled compared with a year ago, from 0.41% for prime ARMs to 1.06% and from 2.70% for subprime ARMs to 5.29%.

But it was subprime ARMs that contributed most heavily to the nation's soaring foreclosure rates. Many of these loans come with low introductory rates that reset higher, often to unaffordable levels, in two or three years. Although they represent only 7% of all outstanding mortgage loans, they accounted for 42% of foreclosure starts during the quarter.

Delinquencies stood at 5.82% of outstanding mortgages, up from 5.59% during the three months ended September 30, 2007, according to the MBA. In the last quarter of 2006, the rate was 4.95%.
Home price plunge accelerates

"In states like Ohio and Michigan, declines in the demand for homes due to job losses and out-migration have left those looking to sell their homes with fewer potential buyers, particularly with the much tighter credit restrictions borrowers now face," said Duncan.

"In states like California, Florida, Nevada and Arizona, overbuilding of new homes created a surplus that will take some time to work through."

California and Florida are the states hardest hit by foreclosures. They accounted for 30% of all foreclosure starts in the United States last quarter, despite representing only 21% of the mortgage market.

Florida's foreclosure start rate more than tripled during the last three months of the year compared with a year ago, and they more than doubled in California.

Both states still have a sizable over-supply of inventory, according to Duncan, due to over-building during the speculative boom that lasted through mid-2006. That will continue to depress home prices and add to mortgage delinquencies in those states.

"We expect to see home price declines to last there through the end of 2008," he said, "after the rest of the country is in recovery."

As prices plummet -- already some California and Florida areas have seen price drops of 25% or more, according to Duncan -- defaults will soar.

And falling prices and growing foreclosures create a vicious cycle; the more prices fall the less likely it is that borrowers can use home equity to refinance into more affordable loans, which leads to more defaults. And as foreclosures rise housing inventory increases, further depressing prices.

At the same time, these trends have lead to a contraction the construction industry, hurting overall U.S. economic activity and increasing the chances that the economy will fall into recession.  To top of page
First Published: March 6, 2008: 10:13 AM EST

[Caleb]

screw you, pat.

[kola]

"

We expect to see home price declines to last there through the end of 2008," he said, "after the rest of the country is in recovery."

errr.yeah right bub...keep dreaming

[Pat K]

screw you, pat.

Hey come up with your own
catch phrase.

Ya lazy bastard.

[kola]

get otta there while you can Caleb. 

[Caleb]

actually, it's a great time to buy here in cali.   

[Caleb]

screw you, pat.

Hey come up with your own
catch phrase.

Ya lazy bastard.

Ok, how 'bout this one:

Live From L.A., it's KISS MY ASS, Pat!

[kola]

yeah its a great time to buy everywhere but most everyone is broke.

I have slashed my clinic buildings asking price from last summer at 250k and now I am down to 125k.

its was appraised at 260k.

and still no buyers.

Kola

[Pat K]

screw you, pat.

Hey come up with your own
catch phrase.

Ya lazy bastard.

Ok, how 'bout this one:

Live From L.A., it's KISS MY ASS, Pat!

Much better.

[dalebert]

I was about to pick on Caleb, but then I remembered that's Pat's job, which he would certainly remind me of if I slipped up. 

[srqrebel]

Sounds like it's about to become a real estate buyer's ultimate dream come true!

Damn, I should have paid more attention to saving

[kola]

i think one is best to invest his  money elsewhere.

ie prepare for bug out.

buy survival supplies.

right now gold is a great short term investment. I know many people who have already cashed it in. (including me). I could have waited longer but chose not to and turned my profits into survival supplies.

even if the shit doesnt hit the fan (highly doubtful) I still have worthwhile and useful items.

Kola

[srqrebel]

Sometimes I think there is a lot of merit in survival planning, but I am rather ambivalent about it as well.  I have not yet forgotten the burning lesson I learned after being more or less swept up by the Y2K hysteria, and nothing happened.

I've been watching doomsdayers predict the imminent fall of the sky now for literally two decades.  I don't know if there is going to be a severe, Great Depression-style economic collapse, or not; one thing I am certain of, bygone years of propaganda-fueled paranoia yielded only one thing for me: Stagnating paralysis.

That is why I keep saying "paranoia paralyzes"!  My desire is to move forward, not withdraw into a stagnant state of paranoia.  I would rather prepare to cash in on whatever comes down the tube, than confine myself to self-defense.  Think big rather than small.  Optimism rather than pessimism.  Offense rather than defense.  Increase rather than merely save. Progress rather than stagnation.

[Pat K]

I was about to pick on Caleb, but then I remembered that's Pat's job, which he would certainly remind me of if I slipped up. 

Since Caleb has gone left coastal crazy,
this has become to big a job for one man.

I know my limits. Feel free to jump in
when ever you think it's needed Dale. 

[kola]

I wasn't not concerned with Y2K. That was pretty transparent.

Kola