Thursday, December 11, 2008

Without AZ, CA, FL, NV and MI, November 2008 Foreclosures Were Down By -1.10% vs. Last Year

According to data released today by RealtyTrac, foreclosure filings in November 2008 were reported on 259,085 U.S. properties, down by -7.35% from October (279,636 properties), but up by +28.22% from November 2007 (202,060 properties). November foreclosures were heavily concentrated in just four states: Arizona (13,136), California (60,491), Florida (49,190) and Nevada (13,962), and those four states accounted for 53% of the total foreclosures in November (136,779 out of 259,085 total).

If you analyze the raw data in the RealtyTrac press release, and take out those four states with the greatest concentration of foreclosures (AZ, CA, FL, NV), November foreclosures in the other 46 states and the District of Columbia actually declined by -10.31% compared to October (vs. the -7.35% reported by RealtyTrac for all states). And compared to November 2007, foreclosures in those other states increased by only +1.61% (vs. +28.22% reported by RealtyTrac for all states). Note: These percentages were not reported by RealtyTrac, they required a separate analysis and calculation.

Comment: The chart above (click to enlarge) of OFHEO house price indexes for Nevada, Florida, Texas and West Virginia tells part of the foreclosure story. The 2005-2007 real estate bubbles were concentrated in states like Arizona, California, Florida and Nevada (see chart), and it's those states where the foreclosure problems are now most concentrated. States like Texas that didn't experience a real estate bubble in 2005-2007 (see chart) are not experiencing foreclosure problems today. November foreclosures in Texas are down by -21% vs. October 2008 and down by -32% vs. November 2007. In West Virginia, there were only 34 foreclosures in November, down by -62% from October, and down by -31% from November 2007.

UPDATE: If you take out the FIVE worst states: AZ, CA, FL, NV and MICHIGAN, foreclosures were DOWN by -1.10% in November compared to November 2007 for the other 45 states and D.C.

14 Comments:

At 12/11/2008 9:21 AM, Anonymous Kevin said...

Great analysis you won't hear in the msm. There's a terrific article on erictyson.com about RealtyTrac's conflict of interest and reasons to doubt the validity of their data.

 
At 12/11/2008 1:39 PM, Anonymous Anonymous said...

Umm...huh...the analysis is lacking in substance and form. The foreclosure contagion is spreading.

Foreclosures are up year over year by:

District of Columbia.319%
South Carolina........284%
Vermont...............266%
Hawaii.................247%
Rhode Island..........202%
Oregon................143%
Virginia................121%
South Dakota.........105%
Kansas.................101%
Idaho....................93%

Should I continue on down the list of the 50 states + DC to California at 53%?

Too bad you didn't address the MBA Survey when it was reported last week. Bye,bye 1980s recession when it comes to mortgage delinquencies. Here comes the Great Depression 11.

A tidbit for you, MP, on Texas.

Ooops, just in case you missed it, households paid down debt for the first time since 1952 (well at least as far back as the Federal Reserve has records).

 
At 12/11/2008 3:18 PM, Blogger wcw said...

I have to stick up for our host here. He's very close to reality. On the whole, price rise off of a ten-year minimum is a pretty good predictor of price fall from peak so far. The dataset I prefer is S&P/Case-Shiller, which does not exclude nonconforming loans (OFHEO, otherwise the gold standard, gets only conforming Frannie data). Download the metro-area data and plot the drop from peak versus the rise to peak, and you'll get a very tight relationship, excepting Detroit. A subset of about eight metro areas stands out with higher peaks and much greater subsequent falls: Phoenix, Las Vegas, DC, and the five areas in FL and CA.

That said, the idea that problems in residential housing markets are contained is risible. Every single major housing market is seeing price declines, including Texas, and unless we do something to head off the ongoing recession, things are just going to get worse.

 
At 12/11/2008 4:57 PM, Anonymous Mika said...

So, who's data is bogus: RealtyTrac's, as Kevin seems to suspect, or is it anonymous's numbers?

 
At 12/11/2008 5:42 PM, Blogger John Thacker said...

So, who's data is bogus: RealtyTrac's, as Kevin seems to suspect, or is it anonymous's numbers?

Not necessarily either are bogus, some just could be irrelevant. The housing bubble had started bursting already a year ago. Some of the states listed by Anonymous are up year-over-year, but from a very small base.

There's also a difference between normal foreclosures caused by a recession in general, and the extra foreclosures caused by states with lots of bad loans and bubbles. One might expect states with otherwise good loans to have a much sharper rise from last year as the economy weakened than the states that already had started seeing lots of foreclosures from bad loans and helped start the crisis.

But because many of the states without many bad loans were starting from a small base, they can have a sharp increase without affecting the total number of national foreclosures very much.

The point about Hurricane Ike is a good one, though.

 
At 12/11/2008 5:44 PM, Blogger John Thacker said...

Too bad you didn't address the MBA Survey when it was reported last week.

Anonymous, that would be the survey that said: "The increase in the overall delinquency rate was driven by increases in the number of loans 90 or more days past due, primarily in California and Florida." and "Nine states had rates of foreclosure starts that were above the national average: Nevada, Florida, Arizona, California, Michigan, Rhode Island, Illinois, Indiana, and Ohio. The remaining 41 states plus the District of Columbia were below the national average."

Seems to me, Anonymous, that there's a lot of support in that report for the idea that it's still concentrated in a few states.

 
At 12/11/2008 5:46 PM, Blogger John Thacker said...

The MBAA report does note that at this time last year, most of the problem was poor underwriting (bad loans) in places like CA, FL, AZ, and NV. Now they're seeing some effects of general economic decline-- something that was previously limited to only MI.

It's unsurprising that states without many bad loans are seeing a sharper increase in foreclosures due to economic conditions, but they were still starting from a much lower base.

 
At 12/11/2008 8:42 PM, Blogger bob wright said...

Tody's Detorit News reports:

"Metro Detroit home sales rose again for the eleventh straight month, figures released Thursday show, though prices have continued a precipitous slide.

In Wayne County, sales increased 23.1 percent to 1,845 homes from 1,499 last November. "

Wayne County is the home of Detroit.

 
At 12/11/2008 9:20 PM, Blogger lineup32 said...

The current foreclosure numbers reflect a pop in the credit bubble rather then a recession job loss style home foreclosure problem.
The credit bubble was national not regional and while fly over states did not have the inflated price increase such as in Calif they did quite a bit of refi activity using their homes as ATM machines and open equity loans. We are now entering a classic job loss recession which again will be national and impact homeowners accross a wide spectrum of incomes and most of these homeowners like Calif have borrowed excessive amounts in early bubble periods from their homes making it more dificult to sell and in many cases puts them in a negative equity position and more likely to foreclosue.

 
At 12/12/2008 12:54 AM, Anonymous Anonymous said...

Without counting my 20k credit card debt, 500k mortgage, 30k loans from friends and 100k loan from my family, I am rich.

mL

 
At 12/12/2008 4:25 AM, Anonymous Anonymous said...

The dataset I prefer is S&P/Case-Shiller, which does not exclude nonconforming loans (OFHEO, otherwise the gold standard, gets only conforming Frannie data).

The Federal Reserve Flow of Funds Accounts have migrated from FHFA (formerly OFHEO) data on household real estate to Loan Performance data.

So the Fed is now presenting a superior dataset in its reports.

Seems to me, Anonymous, that there's a lot of support in that report for the idea that it's still concentrated in a few states.

The monthly data is noisy and the November data is heavily influenced by moratoria. The January 2009 monthly data will be more telling.

Perry has been on this contained delinquency/foreclosure bandwagon for almost as long as he was a recession-denier. He will be proven wrong, once again.

 
At 12/12/2008 9:42 AM, Blogger wcw said...

Anon 4:25AM, these HPI indexes?

The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac [emphasis mine] since January 1975.

As I said, OFHEO's HPI indexes are limited to Frannie data. And while I haven't done the legwork, I'd bet you see similar results therein: things really were different in California, Florida, DC, Las Vegas and Phoenix.

 
At 12/12/2008 12:47 PM, Anonymous wcw'siIQislessthan100 said...

Listen, wcw, it is a simple, narrow issue.

Ben B52 Bernanke now uses Loan Performance (First American) to sign off on Flow of Fund reports.

Do the legwork and lobby on K-Street for CS if you wish.

So let me get this spread trade right. You shorted Detroit in '05, went double long Seattle in '06, triple short in Miami in '07 ?

You are an ex-post dreamer!

 
At 12/12/2008 8:16 PM, Blogger wcw said...

Dude, you have a problem.

Our host posted OFHEO HPI indexes from FRED2. I responded that I preferred Case-Shiller, because it is not limited to Frannie data. This has precisely nothing to do with the Flow of Funds.

Apparently unlike your friends, I have no need to make up my trading history. I have never had a position in housing futures, though I did consider shorting them now and then. Shoulda, woulda, coulda. Shorting homebuilders was tasty enough. I posted about those positions in real time, not ex-post. Ex-post is for people with comprehension problems.

 

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