Bad News

In what can only be said to be bad news for the overall economy, homes entering the foreclosure system rose 18% in California and 12% overall in June over June of last year. This is the second straight month of increasing foreclosures being initiated in California, and indicate an impatience on the part of lenders to tolerate people not paying their mortgages.
(Right here in The Meadows, I know of homes where no house payment has been made for several years but the banks have not yet proceeded against the owners. Every indication is that the banks are stepping up the process.)
According to an Associated Press report, there are more than 3 million households who are behind on their payments (Mortgage Bankers Association), and 13 million US homes that owe more than the current value of their homes.
Overall, it takes 378 days from the time a homeowner gets notification of bankruptcy proceedings untol the home is actually taken over by the bank. Banks historically hold onto the home for some time so as not to flood the market.
At the end of June the banks had 629,000 homes on the market, and not sold. (RealtyTrac)
Many of the homes will go into Short Sale, rather than be taken over by the bank. Nationally, it takes 318 days for a Short Sale home to be sold.

Last year, the lenders seized about one million homes, according to RealtyTrac and the Associated Press, and the prediction is that another 700,000 homes will go into bankruptcy this year.
These are scary numbers, particularly the information that lenders are starting to proceed against those who have not paid their mortgage.
More Short Sales and Foreclosures spell trouble for home prices. We have had solid sales over the past few months in the under $500,000 price range, but few sales above $500,000.
The numbers in the Associated Press report spell trouble for future sale prices, and could depress the housing market further, or at the very least extend the poor housing market time to recovery, and keep the overall economic market limping along.
The answer to one of the questions on the California Broker’s Exam that I took more than 30 years ago was, “Housing markets lead recessions, and lag recoveries.”  That has always been the case, and indicate more years of economic struggle.

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