January 2009 Foreclosures

[Alan]

1/1/2006 - 1/31/2006: 249
1/1/2007 - 1/31/2007: 264
1/1/2008 - 1/31/2008: 429
1/1/2009 - 1/31/2009: 909

111% increase over last year.
I think this is a high water mark for at least the last ten years.

The last few months:
12/1/2008 - 12/31/2008: 660
11/1/2008 - 11/20/2008: 540
10/1/2008 - 10/31/2008: 643
9/1/2008 - 9/30/2008: 607
8/1/2008 - 8/31/2008: 575
7/1/2008 - 7/31/2008: 728

[The Tim]

At least the last 30 years.

See:

[Alan]

It kind of looks like the housing price graph.

Seriously though, it might be interesting to graph forclosures per capita.

[jillayne]

Can't wait to see the NTS for February!

[Hugh Dominic]

Hate to say it, but foreclosures are what the Seattle market needs to bring affordability back. Its nasty medicine (and no fun for anyone foreclosed on) but otherwise we could have a stagnant market for years.

[davidlosh@davidlosh.com]

I've been slow to come around to it, but think that there will have to be another way to get to affordability.

What about the people who borrowed equity to put a child in college? What about the people who bought in the past five years, or traded up, or down, and are now losing value.

It's the family home. Critizing people for doing what they have always been told was the responsible, right thing, of buying a home is a ridiculous way to bring sanity into an insane situation.

If everything is happening the way I think it is going we will have to return to almost 1998 prices. Foreclosure won't get us there. Foreclosure puts properties back under bank control and I don't see them helping the situation.

The government will have to step in and give the banks incentive to let go of mortgage values. The cram down plan is looking to be more in line, but I think it will have to be across the board.

I can see it better than I can explain it. Banks, the investors ultimately, are losing money in the foreclosure process. I don't see why they wouldn't rewrite mortgages to get them cashed out. Let's say they forgo some interest income to amortize a loan quicker.

The investor gets full value quicker and moves on to the next scheme, I mean investment. Getting to a cash basis is the only way i see prices rebuilding.

[rose-colored-coolaid]

I think we need an entirely novel approach to this solution.

First, we pass a law outlawing mortgages for more than 50% of the price of a home and any non-fixed-rate mortgages. Also, set the maximum terms for a mortgage to 20 years. Next, the state should seize all houses, wiping out bond holders. Then, the state should start auctioning off homes to the public. "Desirable" homes are auctioned first (big, fancy, and close to water), and any citizen can bid on any property so long as they meet the downpayment requirement of 50% down and the payments on a 20 year fixed mortgage are less than 25% of their income, and they haven't already purchased an auctioned home.

So, my problem minimizes home values to the absolute, it creates more home owners than this nation has ever seen, and it actually rewards those of us with savings.

OK, admittedly the part where all homes are seized looks like a nonstarter, but that's the only step on my list I don't think is brilliant.

[davidlosh@davidlosh.com]

My problem is that I don't see savers as being responsible.

I don't get rewarding people who refuse to take a risk, hide in a job, collect a pay check to pay rent and bank what they don't spend. It makes no sense.

I ask on this blog in particular "how many jobs do you provide?"

I come here because Tim has started a business out of a passion. He's done a great job here and by the way the job he left has laid people off.

Business is about money. Investors want to make money from the money they invest. In mortgages that's not happening. Foreclosures are a net loss and will continue to be for years to come.

The investor will want to recoup his money to do something else. Foreclosures just aren't getting the number of suckers they used to. Why buy at auction when there are plenty of REOs to chose from, financable, inspections, and banks will take much less for because there are so many.

If investors allocate a portion of the interest payments to principle reduction more people would be inclined to continue to pay. Investors should want to get as much as they can. The current owner, if given a chance to actually own the home in say ten or fifteen years might be more motivated to keep making payments.

As more properties get to a lower principle balance more properties have a chance to sell, change hands, and churn dollars. The investors should be able to figure this out and come up with a system to get prices lower while preserving thier principle return.

[tomtom]

[rose-colored-coolaid]

[davidlosh@davidlosh.com]

It's a Wonderful Life to believe that the banks are using the savers money. The United States is a debt economy.

Savers are feel good, sleep through the night kinds of people that are just a drain on society. Risk makes the world go around.

You should bone up on how the banking system works.

[EconE]

An economy can "save" too much or it can "spend" too much. I think both could be detrimental if taken to the extreme in either way.

Most risk is taken with borrowed money.

Who do the risk takers borrow their money from?

The savers (through fractional reserve banking).

It takes both kinds to make the world go round.

[davidlosh@davidlosh.com]

Sorry,

The world has grown way too complex.

My original comment was in response to a great number of people who think that working a job and saving money is a contribution. Maybe they'll even buy a house if we are all real good.

This thread was about foreclosures. I don't think foreclosing on properties will get the job done from this point forward. Investors, the people who share the risk with a home owner, need to contribute. The home owner is either making payments or not. The loan is either performing or not.

The conclusion I've come to is that the investor will need to take less or amortize the loan quicker. That is the only way for prices to come down. The current home owner has an incentive, is taking the lumps right now, but in the long run houses become more affordable.

[rose-colored-coolaid]

[davidlosh@davidlosh.com]

Funny!

That's the point. It's a risk to hire people.

Most companies can be profitable with less by doing less. It's just a fact that each business goes through cycles of having more or fewer employees and discussing which direction those employees should be directed in order to be more profitable.

Telling me that there is a virtue to working your job and saving your money seems very wrong. Rewarding that type of behavior even seems to be the thing science fiction novels are made of.

I'll research a little more about who contributes more, a person on welfare or a person doing thier job and saving thier money. In my opinion it's about the same. You know we do have the welfare to work programs now.

It really makes no difference. The point is that foreclosures won't lower the price of properties.