Foreclosures Yet To Run Out Of Steam

May 8th, 2008

Despite countless relief measures taken at all levels – local, state and federal, the real estate market continues to go down. RealtyTrac of Irvine, California, said that the Stockton metropolitan region or San Joaquin County, has kept on to its hold as the first ranker in the dubious foreclosure race in the country. The first quarter showed 7,560 foreclosure postings – a triple increase from the first quarter of the previous year, 2007.

RealtyTrac is meticulous in its method of collection of data and sifts through each note that passes through the foreclosure process. It includes default notices – this being the first thing that the borrower receives when they lag behind monthly mortgage payments, notices for auction and bank repossessions. Foreclosure auction notices have to be published in newspapers. Banks repossess the properties at the final stage of the foreclosure process.

DataQuick of La Jolla also details foreclosure figures. According to DataQuick there were 2,500 bank repossession during the first three months of the current year. This shows a five-fold increase from 2007.

From information gathered it seems that foreclosures are yet to run out of steam. There are still miles to go. This should not take by surprise those who have been analyzing the trend. The average price of houses in Stockton increased from $100,000 in 2000 to $400,000 towards the end of 2005. In the background of this zooming and booming was frenetic activity by speculators egged on by the easy loans available from sub-prime mortgages. These required borrowers for the time being to pay only the interest. In many cases, down payment clause was waived. This meant in reality that anybody with a pulse could get a loan! The prices of houses were falsely increased to facilitate sanction of generous funds. Too many people walked into houses they could ill afford. The gamble was that if real estate market continued to rise then the house could be sold off with a profit. But the ‘if’ never turned into a reality.

However every cloud has a silver lining. Each month of the current year the number of house sales has been picking up. Unfortunately more foreclosed units are coming into the market upsetting the ratio. The market continues to be glutted with unsold units – not a good harbinger for the future. How many months or years this will continue remains a big question mark.