The Foreclosure Wave That Won’t Be

Yesterday Reuters published an article about Americans bracing for the next wave of foreclosures, again reminding us that we’re all doomed.

Except… we’re not. I contacted Mike Orr with The Cromford Report who pointed out that Phoenix foreclosures peaked in 2009 and have been trending downward ever since. His research suggests the “wave of foreclosures” in metro Phoenix is actually 90 percent over.

And across the country, delinquency rates are down and continuing to go down, according to information provided by LPS Applied Analytics. Managing nearly 40 million loans across the U.S., their aggregate data is especially helpful in recognizing national mortgage trends.

The Reuters article even mentions LPS figures (suggesting they saw the same data I did), and they then use this data to point out that foreclosure starts “…jumped 28 percent in January.” (EVERYONE PANIC!!!)  However, they neglect to point out that the rate was unusually low in November and December, and had dropped again by February.  Perhaps, in January, banks were simply playing catch-up from last year’s robo-signing fiasco and relaxed foreclosure guidelines traditionally applied over the holiday season.

Reuters goes on to suggest that this coming “wave” is no longer due to sub-prime shenanigans, but due to broad economic factors like unemployment.  However, the unemployment rate, like the foreclosure rate, is also going down.  According to the Bureau of Labor Statistics, U.S. unemployment is currently 8.3 percent from a previous high of 10 percent, in October 2009.

In Arizona, unemployment peaked at nearly 11 percent towards the end of 2009 and into 2010.  This makes perfect sense – remember that’s right around the time foreclosures peaked, too.  Coincidence?  The good news is that Arizona’s unemployment rate is currently 8.7 percent and improving.  Presuming unemployment rates continue to fall, so should mortgage delinquencies.

If you’d like to take a look at delinquency and foreclosure data data, visit CromfordReport.com for Arizona specific info. LPS’s latest report is here.

Please post your thoughts and comments below.

Comments

  1. Glad to hear someone refuting the scare tactics that are in play. When I was shopping for my house, I received so many links to articles claiming that the housing market was still poor or wasn’t going to improve for years in the Phoenix area and that I shouldn’t invest, etc. I can’t claim to know whether an impending wave of foreclosures is or isn’t bearing down on us, but I have witnessed several trends in the Phoenix real estate market that disprove what the media has claimed.
    I was in the market for a house for six months, confining myself to a certain price range and a small demographic area in South Scottsdale. From about September 2011 to March 2012, I watched the prices go up on comparable houses by about $10,000. I went from being the only bid an agent received to witnessing bidding wars that drove a house price way up. People are buying and the market is improving; I’ve seen it firsthand.
    Thanks for links to the facts and for understanding how to interpret data. Apparently Reuters struggles in that regard?

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