CNN just reported 25% of all homes

[EmeraldCityGrl]

are facing foreclosure. This is not my perception of the market in my area.
Does this percentage sound reasonable in your region?

I'm in the Seattle area.

[az chela]

1. WOW,I hope with all my heart that isnt true

[cliffordu]

2. I understand that Seattle is in better shape than most places -

I would bet that home equity loans for keeping up with credit card debt did most of these folks in.....

They tried like hell to sell us one of those things. I'm glad they couldn't...

[Hannah Bell]

3. no, not here either. south of you.

[Rabrrrrrr]

4. Either they're fucked in the head, or you misheard.

That doesn't sound reasonable at all. Unless their criterion for "facing foreclosure" is "has a mortgage", I don't buy it.

[POAS]

5. What is their criteria for that figure?

I could see a 25% number for mortgages with late payments!

That said, if even close to accurate I guess a soft landing for this downturn is probably out of the question!

[jtrockville]

6. They qualified it: 25% of homes with mortgages.

That excludes homes that are owned outright, so it isn't 25% of all homes.

But no, that's not what the market looks like here in Rockville MD.

[salin]

12. While the number is reflective of my (urban/transitional) neighborhood

my neighborhood is not representative of the region let alone the country.

[napi21]

7. I thought I also heard them say that 90% of the people who bought homes in the last few years were

"under water". I have cnn on in the background but THHAT comment really caught my attention!

[TexasObserver]

15. That sounds correct. Better go back to 2003-2004 values.

[Ilsa]

17. From what I understand, 90% of mortgages being underwater

(market value below mortgage balance) would be likely. Those people that own their homes outright may have some loss of equity, even if they bought their homes for cash within the last few years. But people who bought their homes at market value and financed a large chunk of it may be underwater.

[salin]

18. but that is not surprising, nor necessarily alarming

home prices have dropped quickly, and even with traditional mortgages one mortgage is devoted more toward interest than principal in the early years of a mortgage. Frankly the statement (that most recently bought homes) are currently "underwater" seems like stating the obvious given the first points I made.

If those homes were bought within the financial means of the buyers, and there is no intent/need to sell in a short time, then there is no problem. Over time prices will stabilize and in most markets prices will eventually climb again - except in the extreme boom markets where the escalation of prices were extreme (hundreds of thousands of dollars).

For those needing to sell this is a serious problem. For those using realestate (especially in volatile markets) as a speculative investment this is a serious problem. For those who used the home as an ATM, who may not have owed more than the price has dropped had they not taken out lines of equity, than this is a serious problem.

However the statement of "90% who bought homes in the last few years are underwater" is not in and of itself an indication that portion of the recent buyers are facing a serious problem. For many the agreed mortgage size (monthly payment) was budgeted for - and the fact of being underwater is rather irrelevant to the ability to pay and keep up with the mortgage. For these folks (I suspect this represents many of the "90%") a future crisis that might endanger the home has more to do with other economic upheavels and problems such as sudden unemployment, a health crisis or some other similar personal tragedy that interups the monthly budget and ability to pay.

[napi21]

20. It IS a real problem for the lenders though. The collaterol value

they used to base the loans on is now overvalued, and in some cases GROSSLY OVERVALUED! Historically, real estate values remained constant or increased, but never decreased since the depression of the 30's. That's the base cause of the banking problems.

[salin]

23. it is a huge problem (due to cummulative effect)

for loans made without due diligence. For those loans that were interest only with balloon payments, for those that were speculative in nature (akin to buying stock on margin before the 1929 crash), the problem for lenders is big.

However - my point is that the "market value" shouldn't matter much for those loan holders/buyers that bought based on what they could afford, and who bought because they assumed that they would be living in the home for an extended period of time. For those buyers/owners the market value of the home changes nothing per being able to pay the loan.

Sadly, however, while this was the norm in earlier times - perhaps the hyperconsumptionism of the past several years has led to a condition where this kind of traditional buyer is rare and most loans were unsound to begin with (for both the buyer and the lender.) In which case the scenario is very dire - and sadly was very forseeable and preventable.

[rucky]

50. This happened in California during the 80's

Other than that, you're right. Appraisers, working to "make numbers" for realtors and mortgage brokers were among the first to be exposed when this whole thing went down. The other base cause is the ratings agencies like Moody's, which is why I'm inclined to say that Wall Street deserves a little bit of break (just a little) since they were duped, too.

[eyesroll]

8. No.

25% of all homes may be at risk of foreclosure, using some metric or other (late payments, upside down, big ARM resets). But when you consider that plenty of homes are owned outright (and thus not subject to foreclosure), and plenty do have manageable mortgages and equity, there's no way 25% are actually *facing* foreclosure.

[Fed_Up_Grammy]

9. Not in my area either--Eastern MA. That is a very high figure.

Where did CNN get it?

[CountAllVotes]

10. I heard 1 in 5 homes is in an upside down mortgage

Oddly it was 1 in 6 homes the day before I heard this and they day before I heard this (the 1 in 6 figure) they said it was 1 in 7. This figure gets worse every time I hear it! :wtf:

It it is indeed 1 in 4 and they are in upside down mortgages it is possible.

My late brother bought a house for $320,000.00 in 2001. Now, if it could be sold, it would be fortunate to unload it for $275,000.00 I'm thinking.

Lots of big money is and has been lost and more to come no doubt.

I hope that figure of 25% facing foreclosure is wrong. It does not seem to be the case where I live (a rural area that is fairly stable as far as migration/immigration patterns go) with a very weak economy and few jobs.

:(

:dem: :kick:

[tularetom]

11. It's very serious in our area of Central California but nowhere near THAT bad

I don't know what CNN"s definition of "facing foreclosure" is. But I do know that San Joaquin, Merced, and Stanislaus counties in the Central Valley are 1-2-3 in the country in foreclosures and the rate of actual foreclosures is less than 10%..

[TexasObserver]

13. That does not comport with reality, in my view.

[RedEarth]

14. Could be........ article from 10/31.. One in five homeowners with mortgages under water

NEW YORK (Reuters) - Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.

About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic.

The data, covering 43 states and Washington, D.C., includes borrowers nationwide, even those who took out mortgages before housing prices began to soar early this decade.

Seven hard-hit states -- Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio -- had 64 percent of all "underwater" borrowers, but just 41 percent of U.S. mortgages.

http://www.reuters.com/article/wtMostRead/idUSTRE49S3Q520081031

[unc70]

25. about 125 million single-family detached homes, 75 million owner occupied

That includes those with mortgages and those without.

At risk could mean almost anything. While there are serious problems in certain areas, the number of "toxic" loans is far smaller than the hype would suggest.

Read Michael Lewis's recent article. His assessment is that most analysts are either stupid or liars.

[Warpy]

16. I think they're basing that figure

on the overall amount of what they think housing stock is that's been sold since 2002. I think they're way off.

I can see a higher percentage than that being in foreclosure in parts of Florida, Phoenix, and Las Vegas, though, areas hardest hit by this mess. I think enough people in California have been living in their homes long enough that the percentage is a little lower there.

Any place that saw a huge population increase combined with a building boom and real estate price bubble since 2000 will be hit the hardest.

People on most of the east coast and in flyover country are wondering what the fuss is all about, since they didn't see any of those conditions in most areas except the vacation areas.

[Mira]

19. I think they were projecting to the time when it's over - I'm sorry to say - but not now

not here- not yet

[DontTreadOnMe]

21. Here is a stat that will stun you

1 out of 455 homes is currently in foreclosure. That puts it more into the correct perspective.
this seems like a "smaller" number, but it is actually a HUGE number.

Think about how many homes in your town... and then calulate how many foreclosures in YOUR town.
It is happening in EVERY town across the United States.

[flvegan]

22. Absurd.

And "facing foreclosure" is so vague a term, it's meaningless.

[MN Farmer]

28. Damn good point-

I'm facing foreclosure if I don't mail out next month's payment, or I fall down and break my neck, or for some reason the winter never ends and I can't plant another crop, etc etc etc.


Until a home is paid off, it could be classified as "facing foreclosure", and even after it's paid off, it could still carry that same classification for unpaid property taxes.

[flvegan]

34. Exactly, and Welcome to DU!

[2Design]

24. that sounds right - homes are overpriced - the only way people got into them is the

crime family of banks who lied to them and realtors who lied to them and anyone else who made money on their lies.

[alfredo]

26. could it be .25%? That still a lot of homes.

[Liberal_in_LA]

27. No way! Sounds too high.

[POAS]

29. Here are some numbers to chew on:

These were gleaned from various news sources, including Reuters and USA Today.

Estimate of homes in foreclosure during the second quarter is 1.2 million.
Estimate of those likely to foreclose in next 2 years is 2 million.
Homes with mortgages is about 53.1 million.

If these figures are close then in the second quarter about 2.3% of mortgages were in foreclosure and if all 2 million at risk actually do foreclose in the next 2 years the percentage would be 6.2%.

Not the number quoted from CNN but still a staggering loss to our economy.

[Liberal_in_LA]

30. good info. Thanks.

[mnhtnbb]

31. Not in the Triangle area of NC. There are foreclosures, but not 1 in 4!

[galileoreloaded]

32. Sounds about right to me. Look, there are 3-4 million EXTRA homes in this country.

I don't care if you have no mortgage or not, supply and demand doesn't even apply at this point. The Law Of Scarcity does. Your home, even if owned outright, is devalued considerably by the plummeting pool of available qualified purchasers. Buyers are scarce, and you have to get real down and dirty to find a qualified buyer. As job losses fall off the cliff, the pool shrinks further, and the amount of available inventory rises with more and more defaults, a real bad combination. Everybody better be where they plan to be, mortgage or not, you will be there for a long, long while.

We haven't seen the beginning yet. Land, in at least 10 municipalities nationally,has ZERO value. None. Nada.

"But my Realtor said", your Realtor lied to you. In most large growth cities, now underwater, where many of us live, to start a new project is economically nonviable. 100% of the time. The work you see now happening will be the last for a very long time. See, the cost to build, the concrete, copper, wood, block, etc. is more than the vacant house is selling for next door. When you factor in land price, carry to closing, etc. the land owner would have to PAY the builder to make the job pencil out.

Unfortunately, the pace is picking up, and I know this because my company does defaulted contractor takeovers and developer liquidations/boardups. It is sad to say but business is VERY good and actually overwhelming, as I am walking into offices every WEEK and firing between 80-120 people, and breaking up their failed business. With the glut, everything is bringing ten cents on the dollar. No one will be immune from this, no one, and as I have mentioned in previous threads, I even have a relative that is a family practice MD, down to working three days a week. He is looking for a second job.

These failed investments are going to infect many that you wouldn't think, as the majority of my clients are wealthy investors taking 2-4 million dollar hits on their investments. That wipes out about half, and really hurts the other half, strangely enough many of them are doctors and dentists. With net worth sitting on zero.

So if there is a silver lining, it's that quite a few monied folks are finding out they aren't so monied anymore. In fact they are cooked.

[EmeraldCityGrl]

36. Our family physician and the small practice he belongs to, were

insured under AIG. There was a period of time when this was all going down
that they were not sure their malpractice insurance was intact. The building
they're in was also AIG insured.

During my husbands last appointment he told him his business was down
considerably. Patients are inclined to skip visits rather than pay the co-pay.

[HarukaTheTrophyWife]

42. The insurance division of AIG is safe

It's highly regulated on the federal and state level. It's doing well. The company got fucked up investing in and backing up other shit.

[DU GrovelBot]

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[HamdenRice]

35. It sounds about right, out here in Queens, New York. It's a bloodbath.

And these are not new homes, but older homes, mostly built between 1900 and 1940.

Everywhere, on almost every street, there are a few homes that are already empty and abandoned and for sale.

I haven't seen it this bad since the early 70s.

[earth mom]

37. Most of us will be facing foreclosure if the economy goes any further into the abyss.

My husband has what I thought of as a very secure and solid Union job, but I've found out that it's a Union job that the powers that be are trying to destroy.

And at this point, I don't trust that Obama will try and save Union jobs since he had NO Union representation among his financial advisors last week.

[rainbow4321]

38. Dallas area: home foreclosures hit record high for 2008

http://www.dallasnews.com/sharedcontent/dws/classifieds/news/homecenter/realestate/stories/111408dnbusdfwforeclosures.1ac6dad29.html

A record number of homes in the Dallas-Fort Worth area – more than 50,000 – have been posted for foreclosure in 2008.

That's 17 percent more than in 2007 and more than double the number of foreclosure filings in 2002, Addison-based Foreclosure Listing Service said Thursday.


Number/percent increase over last year

Dallas County 22,724 13%
Tarrant County 15,934 18%
Collin County 6,211 23%

[pitohui]

39. whaaaa????

no that's utterly ridiculous

maybe in detroit or something but not here

do they understand that 25% is 1 in 4? if this were true, kind of think we'd know about it (when this figure was tossed around for the number of women sexually assaulted in america and we started talking to each other about our secrets, we realized that yeah it was probably true or even higher, but that's because sexual assault is something people can and do hide -- property ownership and mortgage information is public information)

[northernlights]

40. no way...

Something like 50% of homes are owned outright. It may be 25% of homes on the market or 25% of homes with mortgages are in arrears. But no way that 25% of homes are facing foreclosure.

[depakid]

41. LOL. CNN has ZERO credibility

That's why I programmed it off my TV- have urged many others to as well.

Better to not be "informed" than misinformed.

[123infinity]

43. That is bullshit. There has to be some other metric involved.

:shrug:

[POAS]

46. I'm betting that metric is

they are counting estimates of how many mortgages are "upside-down".

Just being in that condition doesn't alone put the mortgage at risk but if the person needs to sell they will not be able to get enough to pay off their debt and then the risk kicks in.

[OhioChick]

44. Cleveland area? At least 25% or more. n/t

[POAS]

45. Cleveland proper?

I doubt if you stretch "Cleveland area" to include Lake, Geauga and Medina counties you'd get that number.

Adding in Lorain and Summit would bounce it some but not back to 25%, I think.

Cuyahoga County alone could be approaching 25% but that includes some (as yet) very affluent areas also so 25 may still be high.

Just thought I'd pick at some nits. I'm not implying that Greater Cleveland is in good shape by any stretch.

[ProfessorGAC]

47. It Does Seem Awfully High

But, the ability to track delinquency is something all banks have, and easily done, as well.

So, the statistics should be easy to compile and should be really accurate.

That being said, 25% seems too high, because some homes are like mine: paid for. Unless they meant 25% of all homes with a mortgage are at risk. But, if it's 25% of all homes, and at least 10% of homes have no mortgae, then the percentage of mortgages at risk would be 27.8% which is even worse!

I'd sure like to know the source of their data before i accepted a number this high.
The Professor

[rucky]

48. Maybe 25% of purchases between 2004 & 2007

Because of ARM resets and whatnot.

Maybe.

[ProfessorGAC]

49. That's Not A Bad Guess, At All

That would make perfect sense, wouldn't it?
The Professor