Skewed Foreclosure Data

Skewed Data Creating Fear - Haven't We Had Enough of That?

The latest data released by Realtytrac, the leading online provider of foreclosure information (and darn accurate, which is more than I can say for various indexes that shall remain nameless -- for now...) shows that the month of April 2009 hit an all time high in foreclosure numbers.

Foreclosure filings, notice of defaults, auction sales and bank repos were reported as 342,038 in the US during the month of April - a 32% increase over April of 2008. The mainstream media (nawh, not them!) skewed this information and didn't explain WHY to the public.

Homes are selling at accelerated paces and the banks are (finally) helping most troubled homeowners (unless you are a "rich" jumbo borrower) - Condo Vultures recently reported on a news hit on Fox Business we did together that 2/3 of the inventory has been sold in the last year looking at number of homes on the market.

This is good news - so why does the data look so bad? For reasons the media won't tell you. The bad news is that one in 374 US housing units (note I didn't say primary owners, but UNITS - meaning investors are included here - something else the media won't tell you - far less actual FAMILIES are being affected by foreclosure than homes IN foreclosure) are in a state of default.

This number, 1:374 - is the highest since Realtytrac has collected data. So yes, that's bad. But there is more to this story.

Much of the activity in the foreclosure area right now is at the initial stages - bank repos are down - at their lowest levels actually since March 2008. The wonderful administration we've come to know and love decided that they'd institute a moratorium on foreclosure that is now lifted - which means banks are now allowed to process foreclosures again - and so as a survival mechanism (and contractual obligation) they have. THAT is why the number looks so bad but doesn't tell the entire story. They are artificially inflated.

The inserted heat map shows you the worst of the worst - the more red, the worse the foreclosure problem (source: Realtytrac)

So where is the getting good (if you're a buyer) and the market sucking (if you're a seller?)

Forget what the media tells you about that too. It isn't Florida. I am so tired of hearing Florida it is ridiculous! It's Nevada. 1 in 68 housing UNITS (see that word again? Remember I said investors? Yes this was the heaviest investor driven market in the nation) is in some state of foreclosure - 5 times the national average. Note though this is a 44% drop in bank repos from the previous month but default notices ALSO decreased! Yes, this is GOOD news. Is it up from last year? Yep, 111%. That's to be expected.

More investors are realizing they will be dead before the homes they own are worth what they owe (I'm one of them, I'm just foolish enough to wait it out anyway hoping I won't get hit by a bus tomorrow - oh and then there's the whole "I signed the paper" thing), and banks won't work with you unless it's your primary residence. Expect to see this happen even more in towns where lots of investors moved in. (By the way, anyone want to buy my homes in Bullhead City? Ill give you a good deal, I promise.) :-)

OK now onto Florida - it's 2nd highest -- not the highest -- in the nation. 1 in 135 UNITS is in foreclosure, about 2.7 times the national average and about half of what Nevada is dealing with. Repos are down 7% in Florida.. this is good. Total foreclosure activity though is up 75% from April of 08.

Foreclosure activity in California decreased 10 percent from March, but the state still has the nation’s third highest state foreclosure rate in April, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity in California was up 42 percent from April 2008.

After that is Arizona and Idaho - yep Idaho making news for the first time in awhile. I still recall a lady about six months ago trying to sell me 20 "units" there. I wonder where those "units" would be today. Probably on someone's default list. ;)

Here is another noteworthy fact you won't read about in the media. The top 10 states? Yeah, they make upa full 75% of the nation's foreclosure activity! The highest total is Cali (96,000), then Florida (64,000), Nevada (16,000) and Arizona (16,000).

What about metro areas? My "friends" over at a certain index fund seem to think they are all that matters, so let's take a look. Las Vegas is tops on the list BUT has a 20% decrease from the previous month. Not all bad news. 1 in every 56 units in Vegas is in foreclosure right now. If you are an investor, it might be time to arrange a short sale or get out of dodge.

Next? Oh boy, do I even go here? I got beat up pretty badly by Ft. Myers residents who weren't happy with me after a CNN hit, but yep -- Cape Coral/Ft. Myers is second in the nation - 1 in 57. They were #1, so congrats - you are now in the #2 spot. Again deals abound. Also in Florida? Miami at Number 9, and Orlando at Number 10.

California is still getting slammed too; Merced posted the third highest metro rate at 1:65; then Modesto at #4, Riverside-San Bernardino (where I grew up) at #5, Bakersfield at 6, Vallejo-Fairfield at #7 and Stockton at #8. Congrats Stockton, you also moved up the food chain. The message here? Unless you are buying in Cali where the jobs are (LA/OC), just please say no.

Below is a chart from Realtytrac showing more info than you might like to know about each state. These are the real facts folks - forget the networks -- this is the real stuff.

U.S. Foreclosure Market Data by State – April 2009

		Properties with Foreclosure Filings
Rate Rank	State Name	NOD	LIS	NTS	NFS	REO	Total						%Change from Apr 08
--	U.S.	65,456	76,608	100,559	35,512	63,903	342,038						32.25
29	Alabama	0	0	1,763	0	545	2,308						269.28*
32	Alaska	1	0	190	0	45	236						61.64
4	Arizona	4	0	12,595	0	3,646	16,245						39.77
21	Arkansas	168	0	1,295	0	401	1,864						45.06
3	California	52,909	0	30,441	0	13,210	96,560						42.13
9	Colorado	31	0	4,213	0	1,251	5,495						-9.29
19	Connecticut	0	1,695	0	119	360	2,174						25.01
39	Delaware	0	0	0	95	91	186						33.81
	District of Columbia	129	0	191	0	78	398						42.14
2	Florida	0	41,674	0	16,800	6,114	64,588						75.41
7	Georgia	0	0	7,809	0	3,712	11,521						21.68
23	Hawaii	117	0	497	0	70	684						216.67
5	Idaho	1,040	0	1,399	0	39	2,478						220.98*
8	Illinois	0	6,407	0	3,942	3,298	13,647						54.40
15	Indiana	0	1,682	1	2,215	1,121	5,019						-0.57
40	Iowa	0	0	287	0	344	631						9.36
37	Kansas	0	214	0	392	181	787						5.64
41	Kentucky	0	296	0	392	203	891						80.73*
38	Louisiana	0	1	0	896	228	1,125						78.57
43	Maine	0	99	0	125	24	248						-20.77
17	Maryland	0	2,351	0	601	661	3,613						-39.89
13	Massachusetts	0	3,790	0	759	706	5,255						-23.59
11	Michigan	0	0	7,270	0	3,560	10,830						-11.77
18	Minnesota	62	0	2,280	0	1,205	3,547						82.84
44	Mississippi	0	0	323	0	12	335						98.22
30	Missouri	1	0	1,672	0	1,025	2,698						-21.06†
47	Montana	0	0	12	0	49	61						-43.52
46	Nebraska	0	106	0	3	9	118						-79.86
1	Nevada	8,657	0	5,131	0	2,478	16,266						111.25
16	New Hampshire	0	0	678	0	357	1,035						62.23
22	New Jersey	0	3,349	0	1,041	644	5,034						-3.51
33	New Mexico	0	380	0	238	95	713						100.28*
36	New York	0	4,256	0	872	463	5,591						-1.01
34	North Carolina	648	0	1,371	0	1,063	3,082						-14.91
48	North Dakota	0	0	0	22	15	37						85.00*
10	Ohio	0	5,107	0	3,890	3,327	12,324						-4.69
35	Oklahoma	431	0	553	0	193	1,177						-30.76
12	Oregon	124	0	3,109	0	604	3,837						127.04
31	Pennsylvania	0	1,928	0	1,806	1,315	5,049						54.55*
25	Rhode Island	13	0	310	0	233	556						-4.63
28	South Carolina	0	1,111	0	501	697	2,309						180.56*
49	South Dakota	0	0	0	15	2	17						-50.00
24	Tennessee	0	0	2,090	0	1,380	3,470						-25.68††
27	Texas	12	0	7,153	0	4,149	11,314						-9.02
6	Utah	1,104	0	1,162	0	703	2,969						120.25
50	Vermont	0	0	0	0	2	2						100.00*
14	Virginia	5	0	4,214	0	2,035	6,254						5.16†
26	Washington	0	0	2,352	0	1,007	3,359						33.88
45	West Virginia	0	0	137	0	8	145						95.95
20	Wisconsin	0	2,162	0	788	911	3,861						71.98*
42	Wyoming	0	0	61	0	34	95						196.88

*Actual increase may not be as high due to data collection changes or improvements
† Collection of some records previously classified as NOD in this state was discontinued starting in January 2009
†† Collection of some records previously classified as NOD in this state was discontinued starting in September 2008