The Bad News in the Housing Market Continues to Roll-In
The following from Bloomberg confirms with numbers the condition of the housing market. When 13% of subprime loans are delinquent there is still a lot of bad news in the pipeline. Don't expect this market to turn around any time soon.
The share of all mortgages entering foreclosure rose to 0.58 percent from 0.54 percent in the fourth quarter, the Mortgage Bankers Association said in a report today. Subprime loans entering foreclosure rose to a five-year high of 2.43 percent, up from 2 percent, and prime loans rose to a record 0.25 percent.
The median U.S. home price probably will fall this year for the first time since the Great Depression in the 1930s, according to Lawrence Yun, an economist at the National Association of Realtors. . . . .
The percentage of total homes in foreclosure, the so-called inventory, also rose for both categories, with subprime loans climbing to 5.10 percent from 4.53 percent, and the prime share rising to 0.54 percent from 0.50 percent.
Living in an area with multiple foreclosures can result in a 10 percent to 20 percent decrease in property values, said John Kilpatrick, president of Greenfield Advisors, a Seattle real estate consulting firm. In some cases that can wipe out the equity of homeowners or leave them owing more on their mortgage than the house is worth.
In the quarter, 2.58 percent of prime borrowers sent their mortgage payments at least 30 days late, a fifth the rate of subprime borrowers, according to the Mortgage Bankers report. The subprime share of late payments rose to 13.77 percent from 13.33 percent in the fourth quarter, according to the report.
Sales of new houses probably will tumble 18 percent this year, on top of an 18 percent drop in 2006, the Chicago-based National Association of Realtors said in a June 6 forecast. Sales of previously owned homes will drop 4.6 percent, following an 8.5 percent decline last year, the trade group said.
The median U.S. price for a previously owned home likely will fall 1.3 percent in 2007 to $219,100, the first national decline on record, and the new-home median likely will drop 2.3 percent to $240,800, the first decrease in 16 years, according to the real estate trade group.
The Mortgage Bankers report is based on a survey of 43.9 million loans by mortgage companies, commercial banks, thrifts, credit unions and other financial institutions.