Foreclosure disease – it’s spreading….
by Tom on October 31, 2009
in Market Musings, banks
A couple of interesting (and disturbing) points to take from this article:
- We’re in the second of three “waves” of foreclosures.
- Most people who lose their jobs are going to have a very hard time keeping up on their payments if they aren’t able to find a job soon.
- As long as the job situation remains a struggle, we’ll see foreclosures spread throughout the “general” public.
- This is way past being a subprime problem and it’s into being a problem for every community where job losses have and are occurring.
There were some analysts who tried to “spin” this week’s initial unemployment claims number as “improving.” It improved to the point that ONLY 530,000 people lost their jobs last week. If you assume that they were evenly split between those who own and rent based on historical numbers, that’s another 300,000 plus homeowners who became at risk of losing their home.
That’s why it’s spreading and it won’t be over until we can work through a deleveraging of the debt and start generating jobs again.
Tom Vanderwell
Foreclosures are beginning to flare up in suburban and secondary metro markets for Q309, according to a report from RealtyTrac.Dramatic increases in foreclosures from a year ago came in suburban areas previously believed to be more stable, such as Boise, Idaho, up nearly 22% from Q209. Another area, Provo, Utah, is located a distance of 45 miles outside Salt Lake City and rose nearly 11% in the same period. RealtyTrac provides an online marketplace for foreclosure properties with more than 1.5m default, auction and REO listings.
In several states, foreclosure activities drifted toward new focal points, such as smaller towns with previously self-sustaining industries. Chico, California in Sacramento Valley, and agricultural hub, had a 98% increase in foreclosures from Q308, according to the report.
……..“You are seeing that migration into secondary markets. You’re also seeing a migration into formerly stable areas and areas that have been wracked by unemployment.”
……..Sharga sees the foreclosure crisis coming in three waves, and with this new data, the market is showing signs of the second one.
“That first wave of foreclosures cratered the economy, which created job losses, which created the second wave. Now, we’re seeing prime rate loans affected by unemployment. And the third wave will be really a repeat of wave one, except this time we’re going to see a switch of Option ARM and Alt-A loans out for the subprime loans. It will probably be as big but somewhat shorter lived,” Sharga said.
Sharga said that he expects a peak in foreclosures in 2010, only a marginal improvement in 2011 and a return to normal monthly foreclosure activity sometime in 2012
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