Monday, March 27, 2006

Defaults News For Florida, Texas, California

A trio of reports on foreclosures. "A distressed property investment advisory firm reported today that several once hot housing markets in the southeastern U.S. have cooled down, and the inventory of unsold homes is increasing. Alexis McGee said that her firm's researchers had always seen a correlation between flat or declining home prices and an increase in mortgage defaults."

"Ms. McGee said that in Cape Coral, FL home prices had been flat for six months and had fallen 2.5% in the last 30 days. While in six months, the inventory of unsold homes had increased by 155.6%. While in Tampa, FL prices were down 4.3% from six months ago and the inventory was up 129% over the same period. 'Too many people, during the recent boom in home prices, have been using their homes as ATM machines,' said Ms. McGee."

"Readers of The Houston Business Journal learned last week that Houston real estate foreclosures were down in March from February. Unfortunately, a day after the article posted, foreclosures were up again for the April auction, above even February's numbers."

"Houston real estate investors who read this newspaper learned that the March auction had just over a thousand properties for sale and the April auction is scheduled to have more than 1,200 properties for sale."

"Alexis McGee said that home prices in Phoenix, AZ had been flat for 60 days and had actually declined 6.7% from six months ago levels, and that home prices in the recently overheated Las Vegas, NV market had dropped for two consecutive months to a median price of $309,000 at the end of February."

"Ms. McGee went on to say that northern California markets were cooling down as well, with San Francisco Bay area home sales volume declining in all nine Bay Area counties and the price appreciation slowing. She went on to say that the picture was the same in southern California. Ms. McGee said that the major risk of increasing defaults lay in the use of high risk loans issued by lenders during the recent historic price boom as lenders sought to compete with each other during the five year buying frenzy that is now fading away."

"'In San Diego County,' said Ms. McGee, '50% of mortgages issued between 2003 and 2005 were either interest only, or so-called option adjustable rate mortgages with start rates as low as 1%. According to Dr. Christopher Cagan of First American Real Estate Solutions, when these loans convert to full amortization, the payment shock could be in excess of 300%.'"


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