The foreclosure crisis is still with us—and it is pulling down whatever economic recovery we may have seen. The number of bank owned properties, and the actual repossessions in the last quarter, is at an all-time high. As more and more foreclosures hit the market, it drags down the overall value of homes. And when house prices drop, as we have seen in recent years, the economy drops with it.
After all, why would someone want to pay $50,000 more for house A, a regular listing, than for house B, a foreclosure? If both homes are in good condition and everything else is equal, it’s pretty much a no-brainer. The very presence of house B will force the owner of house A to drop the price just to get an offer.
According to the Mortgage Bankers Association, the number of homes in the foreclosure process was at 4.63%, an increase of 5 points over the previous quarter and up an astonishing 78 basis points from a year ago. Homes considered to be in the foreclosure process do not include simple delinquencies.
The news is not all bad though. According to the same figures, the number of homeowners beginning to be in trouble with their mortgages has declined since the last quarter and compared to a year ago.
According to RealtyTrac, Arizona moved up to 2nd place nation-wide on the list of states with the highest number of foreclosures, however the actual number of foreclosures in Arizona has dropped significantly. The spike in place was due primarily to a much larger drop in California’s foreclosure rates. Still, the number of foreclosures in Arizona is nearly double that of the nation.
Another disturbing trend is the type of mortgages going into default. While the earlier problem-mortgages were the high-risk subprime variety, today’s foreclosures are more likely to be on mortgages that were not considered to be a significant risk.
Add to the economic mix the sharp decline in mortgage applications over the past few weeks since the Home Buyer Tax Credit ended. Potential home purchases, after a surge in the fall and winter months, are now at a 13-year low.
While it is still hotly debated whether the economic improvement in recent months is a temporary spike or a long-term upward trend, there is no denying that the housing crisis is far from over. The next few quarters will show us a more realistic picture of what the economy will do, with the housing market leading the way.
Whether you are looking to buy a home or facing a troubling mortgage situation, give the Curtis Johnson team a call. The Curtis Johnson Team is helping individuals who are facing foreclosure and those who are seeking their dream homes.
Go to www.CurtisJohnson.com or call 1-888-Curtis-J.