Foreclosures Up--Hope Down--Deliberate Action or Indication of Recovery?

A report in late June revealed that the foreclosure rate has taken a serious jump, landing about 54 percent up from where it sat a year ago and more than 29% growth between April and May of this year.

Foreclosure notices in Illinois last month topped 16,318 in default notices, auction sales, bank repossessions, and other sale notices. Illinois, as well as the southwestern United States, including Nevada and Arizona are suffering as well with the top three repossession and foreclosures in the nation. The two top metro areas which are hit are Chicago and Los Angeles.

In May of this year there were more than 109K foreclosure listings, and this is twelve percent over what was national a month earlier. The AP says that if the last five years are any indication of what's happening, more than half of the houses in the United States are in foreclosure or will currently be foreclosed on. This number would seem to indicate that the Obama administration's claim that the housing market is in recovery or is slowly recovering may be premature, if not completely wrong. Major media, quick to dive to the defense of the Obama administration and claims of a housing crisis recovery may be left with a bit of egg on their faces if they continue to follow the Obama path.

The sudden increase in foreclosures and repossessions is said to be no accident, but the resultant wave of a policy which was deliberately pursued by the Obama administration on behalf of those who were well off financially. The AP notes "Foreclosure activity, as measured by the number of homes receiving foreclosure-related notices, slowed sharply last year as banks grappled with allegations that they had been processing foreclosures without verifying documents.”

Is this an indication that the houses will soon be on the market to be snapped up by a recovering economy, or is it an indication of things to come?

Stabilizing the New Jersey Housing Market

The New Jersey State Assembly is attempting to stabilize the local housing market with bill A2168. Among other things, it would allow the formation of the New Jersey Foreclosure Relief Corporation for five years.

Under bill A2168, municipalities would have 45 days to evaluate bank foreclosures in their area. They could opt to purchase them as designated affordable housing (and receive a 2 for 1 credit against the required number). Or they could allow the corporation to purchase the home, locking it in as affordable housing for 30 years.

Additionally, the corp. would be able to sell bonds for capital to buy other New Jersey bank foreclosures for sale at market prices.

While most legislators, lenders and realtors back the measure, state director Steve Lonagan leading the conservative Americans for Prosperity group are fighting it, saying it will increase crime, further reduce home values and increase property taxes.

One of the sponsors of the bill proclaims that a scare tactic. Across the nation statistics show that unoccupied homes are more likely to cause an increase in crime and pull down home values, rather than ones occupied as affordable housing.

Cheap Homes In Florida Attract Snowbird Buyers

In the housing market, one man’s ‘hurricane’ is another man’s windfall. This scenario is playing out in the resort areas of Florida. Heavily salted with second and vacation homes, these areas were among the hardest hit during the collapse of the housing market in 2007-8. Owners of these homes walked away from them in droves, many from other countries.

Although prices have started to rise in recent months, the prices are still so far below their pre-collapse highs, homes can be had for one-half to even one-third of their 2007 asking price.

The benefit of the rise and faster turn around on these homes is that now there is financing available for them. During the crisis, lenders would not even look at a mortgage for a second home.

Bank foreclosures or short sale vacation homes are becoming a larger portion of the real estate pie, in some areas outselling primary residences. Small investors are feeling the urgency to find their windfall now, as liquidity and financing loosen and before the corporate conglomerates snap up all the bargains.

(See more at the Orlando Sentinel)