Yesterday RealtyTrac, an online foreclosure sale site, reported that the number of properties receiving foreclosure filings fell 6 percent in May from the previous month, while they are still up 18 percent from May of 2008. This particular report has sparked more skepticism and debate among housing yentas than I’ve seen in quite a while.
At first glance, you would think it’s good news; yes, foreclosure filings down month to month. But the numbers for May are still over 300,000, the third highest on record, and that’s the third straight month over 300,000 as well.
When I suggested to Rick Sharga, of RealtyTrac, that this might be a good report, he said I was clearly jaded (he probably meant deluded, but he’s a nice guy). Add up the last three months and that’s one million properties in some stage of foreclosure. In all of 2005 there were 850,000 foreclosures.
Mark Hanson, of the Field Check Group, calls RealtyTrac’s California data “not accurate.” California has the highest foreclosure volume in the nation, so it’s important to watch that state like a hawk. RealtyTrac reported that California aggregate foreclosure activity was down 4.46 percent. Here’s Hanson’s take:
In May, aggregate foreclosure activity was not down 4.6%, rather up 13.5%. On a more granular level, the takeaways are that Notice-of-Trustee Sales are up 100% from Feb to May and subsequent foreclosures are up 100% from March to May - these are significant events. Especially when considering that the housing market at the low end has been benefiting in part by the lack of inventory caused by the Q4 2008 - Q1 2009 moratoria.
Steve Cook over at Real Estate Economy Watch, notes that while total filings are down, “repossessions and REOs are up two percent over April despite the existence of moratoria in several large states including California, Ohio and Illinois. California’s moratorium which was criticized by consumer groups for too many loopholes, ended on May 22.”
- Gloom Over California Home Prices Hard to Shake
He foresees a spike in the numbers this summer, as do many others, especially since foreclosures appear to be rising in states that are not the usual suspects. Also, as mortgage rates rise, refis that were in the pipeline, but unlocked, are falling through at an alarming rate, and that could add trouble for borrowers who needed a lower monthly payment.
We’re also, so far, not seeing huge numbers of modifications under the new Obama plan. Granted, it’s still in its infancy, but the foreclosure volumes are building far far faster than the modifications.
Questions? Comments? RealtyCheck@cnbc.com