Michael Pento's expectation of a major double dip in housing is starting to come through. RealtyTrac reported that even as foreclosure filings declined marginally, by 3% in May, to 322,920 (1% higher YoY), bank repossessions (REOs) hit a record monthly high for the second month in a row, with 93,777 properties repossessed by lenders. It appears banks are finally starting to pick up backlogged housing currently in foreclosure. And as this REOed inventory goes back on the market, the so-called shadow inventory will tide will wash over the markets and flood existing artificially propped up supply levels, pushing prices much further down. James J. Saccacio, CEO of RealtyTrac confirmed this observation: "The numbers in May continued and confirmed the trends we noticed in April: overall foreclosure activity leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months. Defaults and scheduled auctions combined increased by 28 percent from 2007 to 2008 and another 32 percent from 2008 to 2009 — creating a build-up of delayed bank repossessions. Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed.” This is precisely the event that CNBC's Diana Olick was warning about a month ago. Housing is about to take fresh new turn lower.
More from RealtyTrac:
Foreclosure Activity by Type
A total of 96,462 U.S. properties received default notices (NOD, LIS) in May, a 7 percent decrease from the previous month and a 22 percent decrease from May 2009. It was the fewest default notices since November 2008 and down 32 percent from the peak of 142,064 default notices in April 2009.
Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 132,681 U.S. properties, a decrease of 4 percent from the previous month and down less than 1 percent from May 2009. The May 2010 total was down 16 percent from the peak of 158,105 scheduled auctions in March 2010.
Bank repossessions (REOs) hit a record monthly high for the second month in a row in May, with a total of 93,777 U.S. properties repossessed by lenders during the month — an increase of 1 percent from the previous month and an increase of 44 percent from May 2009. All 50 states posted year-over-year increases in REO activity.
Nevada, Arizona, Florida post top state foreclosure rates in May
With one in every 79 housing units receiving a foreclosure filing in May, Nevada continued to document the nation’s highest foreclosure rate despite a nearly 12 percent decrease in foreclosure activity from the previous month and a 16 percent decrease from May 2009. The state’s foreclosure rate was more than five times the national average.
Arizona foreclosure activity increased less than 1 percent from the previous month and was down nearly 5 percent from May 2009, but the state posted the nation’s second highest foreclosure rate for the second month in a row. One in every 169 Arizona properties received a foreclosure notice during the month — more than twice the national average.
One in every 174 Florida properties received a foreclosure notice in May, the nation’s third highest foreclosure rate, and one in every 186 California properties received a foreclosure notice in May, the fourth highest state foreclosure rate.
Foreclosure activity in Michigan increased nearly 6 percent from the previous month and was up 46 percent from May 2009, helping the state post the nation’s fifth highest foreclosure rate — one in every 223 Michigan properties received a foreclosure filing in May.
Other states with foreclosure rates ranking among the top 10 in May were Georgia, Idaho, Illinois, Utah and Maryland.
Metro foreclosure hot spots continue to post annual declines
With a 1 percent increase in foreclosure activity from May 2009, Vallejo-Fairfield, Calif., was the only metro area with a top-10 foreclosure rate to post an annual increase in foreclosure activity. One in every 101 Vallejo-Fairfield properties received a foreclosure notice in May, the fourth highest foreclosure rate among metropolitan areas with a population of 200,000 or more.
All other metro foreclosure rates in the top 10 were in cities with declining foreclosure activity on a year-over-year basis: No. 1 Las Vegas was down nearly 18 percent; No. 2 Merced, Calif. Was down 7 percent; No. 3 Modesto, Calif., was down nearly 28 percent; No. 5 Cape Coral-Fort Myers, Fla., was down nearly 19 percent; No. 6 Stockton, Calif., was down 33 percent; No. 7 Riverside-San Bernardino-Ontario, Calif., was down nearly 29 percent; No. 8 Bakersfield, Calif., was down 19 percent; No. 9 Reno-Sparks, Nev., was down nearly 18 percent; and No. 10 Phoenix was down nearly 9 percent.