Foreclosure Numbers Increase Pointing To Worse Days Ahead

January 31st, 2008

Washington was not immune to the foreclosure virus. Last year 0.57% house owners were in some foreclosure zone or the other. It ranked 21^st across the country with Oregon closely following on its heels. In 2006 it had ranked 18^th – so that was some comfort that it has somewhat improved its position. In 2007 Washington recorded 23,705 filings on 15,184 properties. There can be multiple legal actions on a single unit. Many delinquent houses do not reach the foreclosure stage because of positive action taken by the borrowers to save the unit. It was 28% increase over the previous year but since the other state records were worse, Washington could improve its ranking. The December filings in Washington (2,016) was down by 18% from November but up by 60% from December 2006.

King County in Puget Sound region recorded the most foreclosures while Snohomish County the least. Pierce County saw 43% more activity than 2006.

The foreclosure numbers are taken as a barometer for reading the temperature of the real estate market. Across the country foreclosures were up by 75% from 2006. This meant that there were about 2 million foreclosure filings on 1,285,873 units.

The states that are leading in foreclosures today were also leading in the housing boom race few years ago – like Nevada and Florida. Mostly these were the speculators who walked away abandoning the units once they saw that business would be further hampered if they continued to cling on to it. Michigan followed Nevada and Florida but for a different reason. Here the economy was crawling with losses in the job market. California and Colorado ranked among the top five in 2007. Those with the least number of foreclosures were South Dakota and North Dakota, Vermont, Maine and West Virginia.

The sub-prime factor aggravated the situation. Prime loans never led to a crisis of these proportions because the loans were advanced only to those who could prove their income and were financially sound. The rise of foreclosures in 2007 seems to point to worse days ahead. In December foreclosures rose by 7% - the fifth consecutive month of increases and making this fourth quarter the worst affected one since 2005. Many of the units listed in 2007 will in all probability continue to complete the circle in 2008, if matters are allowed to drift as of now.