Defaults, foreclosures reached record highs in January
February 13th, 2008, 11:27 am · 20 Comments · posted by Andrew Galvin
The number of residential mortgage defaults and foreclosures in Orange County shot up in January, with figures for both categories at their highest since DataQuick began tracking them.
The number of O.C. homeowners receiving notices of default in January was 2,352, up 24% from December and up 178% from January 2007. It’s the highest since DataQuick began tracking notices of default in 1992.
The number of foreclosures in January spiked to 802, up 25% from December and 424% from January 2007. It’s the highest since DataQuick began tracking foreclosures in 1988.
To be sure, foreclosures account for a small percentage of total housing stock in O.C., which has increased by tens of thousands of homes since the last downturn of the 1990s. But foreclosures and other distressed properties, such as when banks agree to allow an owner to sell for less than the mortgage owed, accounted for 29% of homes on the market last week, according to Steve Thomas at Re/Max Real Estate Services in Aliso Viejo.
| Year | 2008 | 2007 | 2006 | |||
|---|---|---|---|---|---|---|
| Month | Defaults | Forec. | Defaults | Forec. | Defaults | Forec. |
| January | 2,352 | 802 | 847 | 153 | 384 | 25 |
| February | 811 | 164 | 316 | 14 | ||
| March | 986 | 204 | 407 | 28 | ||
| April | 855 | 234 | 374 | 22 | ||
| May | 1,021 | 276 | 444 | 37 | ||
| June | 1,108 | 311 | 462 | 13 | ||
| July | 1,167 | 367 | 440 | 44 | ||
| August | 1,476 | 469 | 498 | 59 | ||
| September | 1,239 | 444 | 588 | 78 | ||
| October | 1,448 | 530 | 599 | 104 | ||
| November | 933 | 364 | 665 | 102 | ||
| December | 1,895 | 644 | 688 | 121 | ||
| TOTAL | 13,786 | 4,160 | 5,865 | 647 | ||
February 13th, 2008 at 12:20 pm
I’m no statistician, but even I can detect the pattern/trend in these numbers. Anyone calling for a bottom needs to look at these numbers. Until the upward trend on defaults and foreclosures stops (and sales volume and inventory at least stabilize), prices will continue to go down.
February 13th, 2008 at 12:58 pm
To put those numbers in perspective.. 1,286 sales in January.. almost double the number of houses going into default than selling. And 2/3 of homes sold in January were basically “washed out” by a different home going back to the bank.
February 13th, 2008 at 1:31 pm
These numbers are horrendous. Where are all those realtors from Mr. Lasner’s Christmastime blog who all said the market was stabilizing and would head back up in ‘08?
If anything, the numbers from early ‘08 point to an even steeper drop ahead than the miserable numbers from ‘07. As they say on Big Thunder Mountain, “Hang on to them hats and glasses, cause this here’s the wildest ride in the wilderness!”
February 13th, 2008 at 2:35 pm
I agree with several of the others leaving comments. These numbers, and they’re similar all over the country, indicate that the bottom of this market is still to come. People are still suffering, banks are still suffering, and the government is just doing the same old thing: manipulating interest rates to look for a new bubble and proposing meaningless programs that might help some but will hurt others. 2008 should be an interesting year, in terms of the real estate market.
February 13th, 2008 at 3:09 pm
Lenders, Banks, Investors are really greedy and stupid. They took advantages of cheap credit policy from Federal Reserve Alan Greenspan and President Bush to push every to limits.
They clearly know the consequences. Profits blind them good and walk into situations with “deal with it later” attitudes.
Lenders and Banks pushed harder to close the mortagage deals with their eyes closes. Fortune has been made.
They would approved every mortgage transactions with little information. Process them, make money, and get them out the doors.
It will cost them big time later. Lenders and Banks deserve what coming to them. Sure they will point the blames and figure out the way to share the costs.
Unfortunately, the housing crisis is a big mess. Everybody has their shares and leave the mess to the rests to deal with.
February 13th, 2008 at 3:53 pm
Lets see……
1286 homes were sold in January
802 homes were foreclosed in January
Any chance that in february we will have more foreclosures than sales?
February 13th, 2008 at 4:20 pm
Be careful about your wishes: any chance that we will have more foreclosures than sales?
First, if you look further, most of the homes were sold as part of foreclosure process or by the banks to Investors, not many regular transactions.
Banks will drop price low enough to attract Buyers and Investors.
There are more foreclosed houses available but little sales because banks could not process them fast enough and price is still high.
February 13th, 2008 at 4:49 pm
To be sure, foreclosures account for a small percentage of total housing stock in O.C., which has increased by tens of thousands of homes since the last downturn of the 1990s.
Um… the owner occupied (keep in mind, DQ’s foreclosure numbers are for owner occupied housing) housing stock at the end of 1996 was 560,753, and in 2007 it was 614,815. The record foreclosure month was October 1996, with 674, and now the record is 802.
That is…
1 foreclosure for every 832 homes in 1996.
1 foreclosure for every 767 homes in 2008.
The way the NOD, and NTS numbers keep increasing, then it will be pretty easy for 2008 to shatter the foreclosure record of 1996.
And, just think… there was job growth in 1995 and 1996. 2007 didn’t look so great, and if the likely trend continues, then 2008 won’t be that great either.
February 13th, 2008 at 9:06 pm
Let’s hope the lenders file perjury charges against those who stated false incomes on load applications.
February 13th, 2008 at 10:27 pm
wal street greed along with any average joe with small knowlegde about what their getting themselves into additude. massive foreclosure we are seeing now a foreclosure boom. a long reccesion and high oil and food cost’s, inflation running at 10% and a falling dollar, we GOT MAJOR CRISIS. credit crunch that will deepen people walking away from their homes. their credit ruined for the next 7years and could careless. housing prices need to fall off a cliff faster when its back to affordable territory the better for the consumer and the entire u.s. economy. this bush boom “house of cars” or “ponzi scheme” everyone knew besides realtors this was coming . the banks cutting dividens by 50% and ther investors and running to bonds for cover. next coming the bonds gonna fall hard. housing crash will finally botom around 2010 maybe. 600k for a shoe box home in oc is not worth it at all. try 350k whats its really worth, live within your means and dump your credit cards. save and invest not living high on credit like a moron just to impress a bunch of people who mean jack $hit.
February 13th, 2008 at 10:35 pm
Graphrix,
It’s definitely smart to look at owner-occupied housing to get a sense of the market and the impact of foreclosures, but DataQuick doesn’t filter that way exactly. They do weed out pure rentals like duplexes, but if someone rents out a detached unit and that goes into foreclosure that will certainly be included in DataQuick’s numbers.
It sounds like you are using Census data for owner-occupied where Census staff call folks and say, “Do you own the residence you are living in?” That’s a world apart from how DataQuick operates.
February 13th, 2008 at 11:04 pm
funny thing, if you think it is bad now. Just wait it is only going to get worse!
February 14th, 2008 at 12:58 am
Matt,
Good point. But, really… how many SFRs/condos are rental units in 2008, compared to 1996? Even if there was any significant difference, wouldn’t DQ’s database be able to red flag those with a mailing address different than the address of the home?
Then, according to an article a while back, by Gittlesohn, on property taxes, the percentage of bills has averaged 80% of the housing stock, which is consistent, like the 60% owner occupied rate of census data. So, even if I took that number, although the owner occ number from the census is more in line with DQs, it would be skewed by the units DQ excludes. All in all, it is a small margin, and using the entire housing stock is not fair number to use. A larger apartment 100 unit building would get 1 NOD, not 100. But, for statistics sake here are the raw housing stock ratios for the record months…
In 1996 it was 1 foreclosure for 1387 homes.
In 2008 it was 1 foreclosure for 1278 homes.
Different numbers, but the same point… last month was worse compared to then, when adjusting for housing stock. FYI, housing stock has only increased by a little less than 100k units since 96.
I am not trying to be a jerk, but when the statement of “To be sure, foreclosures account for a small percentage of total housing stock in O.C., which has increased by tens of thousands of homes since the last downturn of the 1990s.” Is just not a fact supported by the data. You know I respect you, and you know I have ripped hack reporters apart, like Gretchen of the NY Times. You are a much better reporter than she will ever be. I mean, you ask Tanta questions, that shows you know how to find the facts.
February 14th, 2008 at 1:39 am
And, one last thing… you know I pull my guesstimate numbers directly from county records, and my margin of error is less than 10% with DQs, month after month, for the last year plus. So, that would mean the 2+ units are a small factor, when DQ excludes them, and since the owner occ rate has consistently been 60% of housing stock, the margin of error for rental SFRs/condos must be a small margin of error.
BTW, I appreciate you posting at IHB. I would hope you would post more often, as you, and other OCR reporters would be a welcome addition. We are not your competition. We are an unedited blog, that can say whatever we want, and make predictions and add opinions however we want, and we have been right, but we will admit when we are wrong. That, and we do not get paid to do it, we do it because we enjoy it.
February 14th, 2008 at 6:18 am
Graphrix,
When we noticed foreclosures spiking last year and compared that to the ’90s slump, we decided to see how housing stock had changed as well.As one decent measure, we totaled the construction permits for houses from I think the early ’90s to 2006 and the increase was about 90,000 units. We excluded multifamily permits, which is mostly apartments, although some condos. So to say housing stock has increased by tens of thousands is certainly correct and helps keep things in perspective.
I don’t dispute that looking at a ratio of foreclosure filings to owner occupied units has value. But the best census data available is from 2006. Did you use a 2008 projection or the 2006 figure? Why don’t you post a web link or links to the data you are using for owner occupied? I’d like to see it. Thanks.
February 14th, 2008 at 6:40 am
I would like to comment and get feedback from the numbers of people I live near, Corona del Mar and Newport Beach, who claim that these are the lowest prices these homes will ever be and it’s a great time to buy. Even in nice communities like this- the median income does not support the home prices. Most people couldn’t afford to buy their own home right now. How much could these homes come down in the ritzy areas?
February 14th, 2008 at 7:14 am
It’s so funny - many people were warning of this years before it happened and now it’s here just as predicted. Record declines, record foreclosures. Just wait until 2009 and see where things sit…
February 14th, 2008 at 10:42 am
buster,
I use a simple rule of thumb for evaluating home prices for the long term. I look at the rents for condos and entry level homes for the area of interest. If I can’t put 20% down with a fixed interest rate, 30 year loan and get cash flow positive on the estimated rental income, then I know the area is overpriced. Rental prices are for the most part steady. Based on my approach, all of Coastal California is overpriced right now. I live in San Luis Obispo County, California and have been investing in Austin, Texas. That is how I have been playing the market for over 3 years now and it’s working.
http://www.solventproperty.com
http://www.investmentbinder.com/view-binder?id=kennycud
February 14th, 2008 at 5:32 pm
Housing market data from January show California home sales have plunged to their lowest level in more than 20 years.
41 percent drop from January 2007’s total and down about 25 percent from December’s sales.
The statewide median home price also fell in January to $383,000. That’s a drop of about 17 percent from $462,000 a year earlier.