While mortgage delinquency rates are showing signs of easing, residential foreclosures
are once again, on the rise. A data-point worth noting, is that delinquencies did inch upward
from 7.2% in January to 7.3% in February. That key metric is certainly something to keep an eye on.
According to LPS and RealtyTrac, approximately 2.7+ million residential properties are
in some form of loan delinquency and as of February, approximately 800+ thousand
homes have been repossessed. RealtyTrac CEO Brandon Moore said the “numbers point
to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed.”
So while defaults do seem to be declining, 1-4 family forfeitures are now increasing and
according to leading broker-dealer Amherst Securities, “some 9.5 million homes are
still at risk of default.” much to the chagrin of the real estate industry.
- 2.7 Million mortgage delinquencies (30/60/90-day)
- 1.41 Million distressed assets (approx. 34% of all inventory)
- 1.6 Million Shadow assets (possibly 3+m in total)
- 26% +/- of mortgage holders currently ‘underwater’ (negative equity)
- 5.4+ Million total housing assets (includes claimed shadow assets)
- 13 -/+ Month Supply of total Housing Inventory
Overall “printed” housing inventory stands at approximately 4+/- million units in the U.S.
(as the industry and its contingent of boosters do not account for or care to acknowledge the
millions in shadow inventory) with 2.43m existing homes, 1.41m distressed assets, approximately 151k new homes and at least 1.6 million of shadow inventory, that is publicly disclosed.
(estimates for total inventory are as high 7+ million units, due to the very real possibility
that many banks – at the urging of the FHA and the Fed are not disclosing all of their distressed/shadow inventory)
Another data-point in decline, is sales of foreclosed homes, which has fallen approximately 24.3%
in the first two months of 2012 from December 2011 according to LPS. This drop off is more rough news for the already over-supplied inventory of the U.S. housing market.
So while there is a glimmer of positive data with regards to mortgage loan defaults, the pace of forfeitures are accruing and sales of all homes, existing, new and distressed has been slowing. Unfortunately, this trend will place even further downward pressure on already overall weakened home prices.
Which in turn, has the affect of creating additional negative equity for a portion of existing mortgage holders who are not yet ‘underwater’ but are barley maintaining current mortgage payments.
Thus, increasing the likelihood of additional loan defaults as well as strategic-defaults.
Negating any exaggerated and so-called “housing recovery.”
Analysis from all of these key metrics and data points, reveal a sobering picture for the residential real estate market. Housing, may in fact not recover for another 5 to possibly 10 years.