This chart was posted in the Sacramento Bee yesterday, in an article about the growing local business of prepping and selling bank owned houses. The article described the boom industry in handling repo houses,and the power shifts that our local real estate community as brokers who were previously considered bottom feeders are now the regions leading (and nearly the only successful) brokers for about the last two years.
Per usual for the CrapBee, the article missed the most important and interesting aspect of what's happening here.
Take a close look at the two charts. Both regional and Statewide, two irrefutable conclusions grab put a bone in my throat:
(1) The number of mortages in default has skyrocketed in the first quarter of this year and,
(2) The number of defaults in each quarter determines the number of foreclosures in the following quarter.
The New York Times recently blathered about how Sacramento's housing market was showing signs of recovery in May of this year, when sales increased about 45% over the previous year. The Times didn't look too closely at prices,which local boosters say have "bottomed" because now the decline is only about 1% or 2% per month, versus the 30% to 40% annual declines we've been seeing.
Well, boys and girls,what do you think will happen when this spike in default translates into foreclosures and inventory. Add local unemployment at 12% and rising, stir,and see what you get. My gut feels the local housing market could easily shed another 10% to 15% in value.
That's my story and I'm sticking to it.
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