This page has been archived and commenting is disabled.
“Foreclosure Rebound Pattern”: Foreclosure Starts SUDDENLY Jump 57% in California (And Soar In Much Of The Country)
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
From Federal-Reserve-fueled bubble to debilitating return to reality – reality being a financial calamity – to Federal-Reserve-hyper-fueled bubble: that’s the US housing market over the last ten years. There are many places around the country, including some cities in Silicon Valley, where home values are now higher than they were at the peak of the last bubble. Of course, no one at the Fed or in government calls it “bubble.” They’re talking about the housing “recovery.”
But the excesses and speculators are back, and private equity funds and highly leveraged REITs are all over it, buying up every single-family home in sight, and now Wall-Street-engineering firms have come up with a new and improved contraption, a synthetic structured security that on its polished surface looks like that triple-A rated mortgage-backed toxic waste that helped blow up the banks. But this time, it’s different. The securities are backed by sliced and diced rental payments from single-family homes that are, hopefully, rented out [read.... Another Exquisitely Reengineered Frankenstein Housing Monster].
So wither this “recovery?”
Foreclosure filings – default notices, scheduled auctions, and bank repossessions – suddenly jumped 8% to 124,419 in January across the nation, according to RealtyTrac. Which left some people scratching their heads. A mild uptick was expected after the holidays, but 8%? And what about the polar vortices – weren’t they supposed to have slowed things down to a crawl?
OK, foreclosure filings were still down 18% from a year earlier, the 40th month in a row that they declined on an annual basis. But it was the smallest annual decline since September 2012. And the 8% jump from December was the largest such increase since May 2012. Crummy as they were, these national averages covered up some, let's say, interesting phenomena in a number of states.
“The sharp annual increases in some states shows that many states are not completely out of the woods when it comes to cleaning up the wreckage of the housing bust,” said RealtyTrac VP Daren Blomquist. “The foreclosure rebound pattern is not only showing up in judicial states like New Jersey, where foreclosure activity reached a 40-month high in January, but also some non-judicial states like California....
Ah, my beloved state of California. Housing has been booming, and prices in coastal areas have been soaring – along with rents, to the point that mini-rebellions are breaking out. In this hyped and glorified housing market where the Big Money rules and where first-time buyers have been shoved aside unceremoniously, where foreclosure starts in 2013 had plunged 60% from 2012, and had declined year-over-year for 17 months in a row, or with the exception of five months, had declined four years in a row, well, in this wondrously recovered housing market, foreclosures starts in January suddenly jumped 57%.
It’s not just in California. Foreclosure starts rose 10% from December to hit 57,259 properties across the country. That they on average were still down 12% from a year earlier obscured major annual increases in certain individual states, and not just in one or two, like us crazies out here in California, but in 22 states! And California with its 57% jump in foreclosure starts now suddenly seems tame: In New Jersey, they soared 79%, in Connecticut 82%, and in Maryland 126%!
The cynic in me says the sudden and dizzying jump in foreclosure starts, not only in California but in much of the country, must be some kind of data problem. Maybe RealtyTrac’s computers got hacked by some evildoer who was short the housing market or something. But when I contacted RealtyTrac to request permission to republish the chart, there was no word of a retraction, though this would have been a good opportunity, and so the numbers hold.
Maybe foreclosure starts in February and March will somehow, miraculously, plunge and return to trend. Maybe January was just a fluke. But that may be wishful thinking. Instead, it could be the indication of a turning point of sorts, like some of the other indications we’ve already observed, and maybe the strange sound that we’re hearing out there is the hot air hissing out of this whole construct, so carefully inflated by the Fed, and so assiduously taken advantage of by private equity funds and other Wall Street outfits with access to the Fed’s nearly free money.
Meanwhile, my beloved state of California, whose $2 trillion economy is the eight largest in the world ahead of Italy and Russia, has a new problem: it’s awash in cash. It’s projecting multi-billion dollar surpluses for years to come. The feeding frenzy in Sacramento is a sight to behold. Read.... California MUST Have Magnificent, Endless Bubbles in Housing, Stocks, And IPOs – Or Go Broke Again
»
- advertisements -
income, rent and hsg price(s) with diverge, merge, crash/ burn, join, but eventually end where income goes one way or another.
income the determining factor unless the serfs become slaves to the masters(where it is going)-the berfuck, blackcock and rest compliciate of discount window cash leverage rehypothicated and spun out as toxic bonds to bagholders... rinse repeat til majority under water...
A temporary setback. Real estate is going to the moon. They aren't making any more. It's a chance to get in at the bottom floor. It's a new paradigm.
"Its never been a better time to buy"
Buy now, or get priced out; FOREVER!
btatfh(igh)...
You are correct, this law was renewed again and again till the end of last year.
I would like to know how many of these forclosures are shadow inventory that hasn't been officially forclosed on from the 2007-'08 debacle.
House next to me has been empty for 3 years and no payments were made in the 3 years prior to that. What is funny is they were never upside down and the bank sill didn't take it. going on 6 years now. I do think it will be sold in the next few months. It will be nice to have neighbors agin as the new owners on the other side don't speak english, but they seem ok.
Good question. Here's an even better nor though - how many are re-foreclosures on modified loans, or cases where the foreclosure firm dropped the ball the first time and the court dismissed the lawsuit?
Tortfeasor, just curious,
There was a poster of that name on the old Kitco forum of the later 1990's-early Y2k.
Are you the same?
Not I, sorry.
I read a news article that the mortgage principal forgiveness tax exemption expired on December 31st. So, if I was processing a short sale of my $250,000 house and only got $100,000 the other $150,00 in principal is "income" that was tax exempt from 2007 until the end of this past year. With no incentive to short sale, distressed homeowners will likely have no alternative to default.
This is correct. Short sales and strategic defaults are a memory from a bygone era.
How many of us knew someone with a 120k/year job who chose to strategically default anyway and then buy a more modest home in cash (thus pushing up prices of starter homes)?
Fucking assholes, no doubt about that. Massive debts and lavish lifestyles, but still making out like assholes. Oh well, at least I don't have a 250lb. wife, half of who's kids who aren't genetically mine to provide for.
Don't hate the playa.....hate da game.
Jerry Brown is on it, I'm sure, with moonbeams.
You only get a cute nick name if some one likes your head lights.
Oh wait. That only applies to chicks. Never mind.
Ya gotta hand it to Al Capp, he could draw some babes!
foreign money is chomping at the bit to scoop up CA real estate
That money was mostly tapped out since the drop in 2008-2010. Then came the hedge fund/rent speculator market guys +local home flipper investors from 2010-2013. With the forecast increase in home mortgage rates over the next 5 years and the declining wage/job situation/drought in Coastal California the chicken bones are coming up "Unfavorable" for continued returns on housing investments.
THe bubble is starting to leak and everyone is waiting for the real "POP!".
Thomas Jefferson is spinning in his grave.
actually I think he's laughing his balls off.
He bought the entire Liousianna Purchase for 36 million...now you have people paying that much for an apartment in Manhattan or some set of digs in Miami.
This country really doesn't know how to operate without some type of "speculative blow off top."
QE may have turned out to be the greatest final act ever.
http://www.washingtonpost.com/blogs/plum-line/wp/2014/02/12/obamas-free-...
hard to get these real estate bubbles without "free capital flows."
he better stop or he'll get hit with a excessive motion tax.
"the entire Liousianna Purchase for 36 million"
Napoleon was an idiot.
The Louisiana Purchase was some 828,000 Square Miles ranging from the Gulf Coast/Florida to north of Wyoming!
He could have ceded Haiti and poured the French Navy and Army into New Orleans to hold the largest port on the Gulf, the length of the Mississippi river, and what would become the North American 'bread basket'.
The nascent USA which had not one standing division at the time, no navy: Lewis and Clark weren't even sent to survey the vastnes of this territory by Jefferson until after the purchase...
The British ended up destroying the French navy at Trafalgar. In retrospect, Napoleon made the right move.
The lesson that needs to be understood is the fatal flaw in exponential growth . Quick story that helped me GET it.
Lets just say our rate of growth is 7% because that gives us a doubling period of 10 years. That makes the math real easy.
My $50,000 house in 1970 will be
$100,000 in 1980
$200,000 in 1990
$400,000 in 2000
$800,000 in 2010
$1,600,000 in 2020
$3,200,000 in 2030
$6,400,000 in 2040
$12,800,000 in 2050
So by know we all get the picture right ?? This whole exponential growth plan is mathematically impossible to maintain right ??
I mean if wages do not grow at the same rate who is going to be making the payment on a 3 bedroom $12,800,000 house in 35 years. I appreciate that this is a bit over simplified but the concept is not that hard to GET. Thoughts from the ZH brain trust ?
MOTN,
Economic concepts as you explained here are actually not harder than how you have displayed it, in fact if the government treated things with such openness than we might have an actual free market, driven by supply, demand, capital, labor and resource utilization that actually accomplished something. I believe the tipping point came in the late 1980s as the Japanese demonstrated that you simply cannot print your way to prosperity, tramp around the globe with your new found wealth and expect the game of hot potato to go on forever. See Wall street, the cronies in DC all know this, they know the math doesn't work, but they also know that 80% of the population cannot figure out, why the hell they cant survive, why the hell they work so much and get nothing in return, why the hell they don't work at all and make more than actual average workers. Your math is absolutely correct, but the prices you are reflecting can be possible in your 2020 scenario, but it will only come at the very top or 1 to 5%, everything else will have to move to intrinsic value or "actual" affordability. This is why the equity market is so high, it is the savings accounts of those at the very top, nothing more. Everyone else but them will suffer and you will have two economies, that which is for the very rich, who continue to increase Porsche, Tesla, Google, values and the real economy. In this paradigm, both inflation and deflation coexist, because one economy can press it, while the other economy is depressing it. Back in the days of torchs and pitchforks, our government would have been dismantled by now, the crooks in the banks and congress hung in the town square and a new government would have to take form. We are so inundated with propaganda, mindless thoughts, slight of hand by a media controlled by a few large names, in fact one less large name after todays comcast bid. It is basic rinse repeat recycle and hope that the prior generations don't remember the mistakes of the last. Anyway Credit and leverage is how you ascertain your 2020 and 2030 numbers, but that will only be for the top 1% the rest will get wittled down slowly, not to fast so they actually notice they are getting screwed, just slow enough to eek out a miserable useless, wasted life. Like Gekko said you are either on the inside or you are out Buddy, you actually think we are sitting around throwing darts at charts, thats for losers, the real deals are done inside. As it was then as it is now, same game different clothes. As I say to all those that complain about the disparity of income. PUll your money out of the banks, use cash and gold else quit bitchen because you are part of the problem
Is that inflation or growth? They are not the same.
As forst gump sed, STUPID IS AS STUPID DOES! What gets me is the ones that shrug off the facts and brag about their homes values who have kids, but when I come back with the facts if this rate of growth continues your kids and grandkids generations will never be able to afourd a home . we are in the ME, ME ME, generations were no ones looking at the future prosperity of the next generations. sorry but i have to say it is a sad time to be an american!!
My interpretation is that Boomers are assholes.
Thank your Greatest Generation while they still have time here to hear it.
@ W74:
Boomers are soon to be WERE assholes.
The so-called 'baby boom' started in '46, and went through '62, as I recall. The oldest of these are now 68 years of age (if they are still alive).
Has anyone done a study that has the average of the ages of those who are CEO's, government officials, and other groups who constitute the so-called 'PTB'? Further, do the wrinkled faces and grey-haired heads of the 'experts' who extoll the 'way it needs to be' have an EXPIRATION DATE?
The BOOMERS were not ASSHOLES; they were the MOST PRIVELEDGED generation (not the so-called 'GREATEST'), as force-fed to you by the likes of CBS.
Nevertheless, I understand your interpretation and can take a new education from an observer who is not one of them (US, in my case). It's one thing when you look in the mirror and wonder what others see. It's totally another matter when you hear opinions from those who actually SEE you (or, at least the appearance that you try to front).
We're not ALL assholes, you know. SOME of us have managed to survive, and think beyond the matrix that was designed by 'US'...
No I think you're confused, the Greatest Generation begat the Boomers.
There is no overlap. I wasn't force fed anything. Those born between 1900-1925 were truly something the US had never seen before.
The so called greatest generation raised and educated the boomers. They had lots of kids and turned them all into assholes, according to you.
Thank you greatest generation. You're the bestest.
From a boomer, Get the fuck over it!
I'll call you a wahhhhbulance.
Willy,
You still haven't learned that you cannot fight mediocracy and idiocracy by attempting to ingraciate yourself with those who are obviously your juniors; trying to use trendy catch-phrases and non-sequitor humor that expires in seconds; dredging up old, stale, and non-understandable humor from an era that you remember,; but that they have no conception of at this time.
My children might hate me, but they also love me; because I always told them the truth, and answered their serious questions and doubts with serious talk and palaver.
The people who are wrecking this world (and every single part of it) are YOUR PEERS, Willy, and the children are now asking and righteously pointing out that YOU (and I) are the ones of THIS generation; so WHY didn't WE stand up to our PEERS and STOP THEM?
Jesus with a gun. Yeah, THAT's a good one. (NOT!)
Stupidity grows at 14% so it's covered
One of my favorite Einstein 'quotes' (paraphrasing)...
Both the universe and human stupidity are limitless...but I'm not sure about the universe.
It's not a fixed number. It is a Hyperbolic rise.
http://www.bing.com/images/search?q=autism+charts&go=&qs=bs&form=QBIR#vi...
This is a must watch for understanding the hazards of exponential growth inside of a closed system. ( The Earth IS huge and it IS a closed system )
Are humans smarter than yeast ?? http://www.youtube.com/watch?v=hM1x4RljmnE
So does my post apparently. (double)
What - no one knows about Jack and Beanstock? I learned from childhood that trees do grow to the sky.
@man...ill give u 1.25mil in 2020 not a penny more.....to cement the deal, ill give you a post dated bitcoin if you want...
Will you trade me your shitcoin for a Pet Rock (still in the original green grass-looking plastic stuff, and in the stupid box)? it comes with a 'W.I.N.' button, signed by Gerald Ford AND William Simon!
In 1970, if someone had a $50,000 house, they had at LEAST a 4,000 square foot VILLA on an acre, by the way. I lived in one of the most affluent areas in Southern California in 1970, and the house was on a quarter-acre corner lot (I guess), and had two stories, a basement, and about 2,600 square feet (not counting closets, bathrooms, basement, etc.). It cost @$22,500.00 (in 1969). Maid's quarters were off the formal dining room (with it's own bathroom), and the living room was as big as the average 2-bedroom apartment (about 900 square feet by itself, actually built as a wing off the main house). During the Sylmar Quake in '71, we sustained exactly ONE small pane of glass cracked. You can search the address 1854 East Mountain Street, Pasadena, if you wish (We moved out in '75).
Of course, times were different back in the early 1970's, and the neighborhood there was going dark rapidly (due to the totalitarian Socialist implementation of Forced Busing in the schools, also known as 'Integration'), as Pasadena was one of the two 'Pilot Projects'.
In the year 2020, minimum wage will probably be paid in Bitcoin, anyway (just as worthless as the FRN, but SO MUCH MORE DOUBLE-PLUS NEW!).
In 1970 didn't the US actually make their own underwear and steel beams used in construction ....
Not only did the US make it's own underwear, it made the cloth it was cut from and the thread it was sewn with. The fabric was of good quality, not the smelly, sad, rotting, fragile stuff that comes from China with its ghastly loud prints and colors that bleed, and the thread was strong. You can't even buy natural fabric at a yard-goods store now except for poor quality cotton that isn't even polished (probably wouldn't hold up to the process, and they don't care to go to the extra expense). They've replaced polyester with a spandex-cotton blend that is just awful. At least a few years ago, the last time I looked, you could still get wool, linen and silk if you special ordered it and paid the price, but all that beautiful men's suiting fabric was no longer available. I have a 9 foot oval braided rug made of men's wool suiting, and it has lasted all my life and still looks great. Men's suits used to last nearly forever and working class men only had 1, and they were buried in it. Sewing thread is of such poor quality that it breaks with little pressure, and if you look closely you can see little wisps of fiber along it's entire length. It looks fuzzy. It starts to unwind and come apart as soon as you cut a length. Its lost the firm twist it used to have, breaks frequently at its many weak spots and it quickly rots away. I think this is representative of all our belongings now, and we are screwed. If the US dollar loses its status and is no longer accepted in other countries, or some similar disaster befalls us, we will sit here in our rotting rags, starving as the things that make up the fabric of our lives break down and can't be replaced.
"Houston, we have a problem".
Commander James Lovell
Actually he said "Houston, we've had a problem."
Cleaned up for the movie.
Actually he said "Houston, we've had a problem."
Dramatized for mass consumption by Hollywood.
Fixed it.
Actually he said, "Houston, there was a slight exhaust event and we've lost the hookers and blow."
Made better for ZH consumption by me.
Broke it.
He actually said "Spock, are you out of your Vulcan mind?!"