Foreclosure activity in the Phoenix metropolitan area was on the rise in October and November, with a rate of about 300 foreclosure notices per week, according to research by Foreclosures.com, an investment advisory company that specializes in foreclosures.
The company also reported today that a drop in home sales in parts of Northern and Southern California could be an indication of a “long-awaited price correction” in the state, and predatory lending problems continue to plague New Jersey.
Alexis McGee, Foreclosures.com president, said there were 1,165 new notices of trustee sales in the Phoenix metro area in October and 1,254 new notices in November. Also, 4,996 sales were pending in November, up from 4,873 in October.
“This rise in foreclosure activity is a disturbing trend,” McGee said, “because the Phoenix area economy is in full recovery and housing sales are still strong. Twenty percent of home sales are to incoming retirees who often bring cash and stable incomes with them.”
“Arizona has yet to join at least 20 other states in enacting legislation to curb abusive lending practices,” she pointed out. “We don’t see a lot of progress.”
In California, a 13.3 percent year-over-year drop in sales volume in southern California and a 4.7 percent decline in the Bay Area is the first sign that housing markets are beginning to correct, McGee said. “In Orange County, the median price has dropped from $600,000 last May to $532,000 in October. The affordability issue is finally coming home to roost. In the Sacramento area, the inventory of homes above $750,000 has jumped 24 percent year-over-year to a 7.5-month supply. That’s a sign of a shift from a seller’s market to a buyer’s market.
“A survey by the Public Policy Institute of California released on Nov. 18 showed that 24 percent of residents are considering leaving because of high housing costs, and 31 percent say that housing costs put a financial strain on their households today.”
McGee added that declining prices and nonexistent real income growth would collide with rising interest rates on adjustable mortgages in 2005 to strain many household budgets to the breaking point and create an increase in mortgage defaults.
Rates for the benchmark 30-year fixed rate loan have dipped slightly, but Ms. McGee said that economic indicators point to rates going up in the near future and staying up. “Rates dropped recently because heavy foreign buying of the 10-year Treasury note has pushed yields down, but we expect that to slacken as the dollar stabilizes,” she said. “Also, we saw strong corporate bond offerings in the first week of December. That means businesses are converting short-term obligations to long-term debt. Combined with the refinancing of the deficit, that means increased competition for dollars in the credit markets.”
Foreclosures.com has been tracking foreclosures and assisting investors since 1992, serving markets in California, Phoenix, Las Vegas, Chicago, New York metro area and the state of New Jersey.
What’s your opinion? Send your Letter to the Editor to firstname.lastname@example.org.