Foreclosures on the rise
Thursday, May 28th, 2009Bloomberg reports Mortgage Delinquencies, Foreclosures, Rates Increase:
“If people don’t have a paycheck they can’t support a mortgage,” Jay Brinkmann, the MBA’s chief economist, said in an interview. “The longer the recession lasts the more people run through their savings reserves, leading to higher delinquencies and higher foreclosures.” …
One in every eight Americans is now late on a payment or already in foreclosure as mounting job losses cause more homeowners to fall behind on loans, the MBA said.
The recession is taking its toll on housing, and the longer we are in a recession, the further housing prices are going to fall.
Measuring both old and new defaults, 11 percent of all mortgages in Florida were in foreclosure at the end of the first quarter, the highest in the U.S. In Nevada, it was 7.8 percent, in Arizona, it was 5.6 percent, and in California, it was 5.2 percent.
The question is how many of the 5.6% are going back to the banks? More foreclosures will lead to lower housing prices. The historical house price average is around 3.1 times the average annual household income. Look for a bottoming when this happens. Tucson family income for 2008 was roughly $44,000, household income was roughly $36,000. The Tucson Association of Realtors reported in April the median average home sold for $164,000 still above the historical average when using either the family or household income. I look for prices to continue to drop this coming year. The month of May will probably show an increase in sales and home price but I would look for the summer to continue to decline.