California Headed for TROUBLE???
For what one expert thought was the first time, the number of monthly foreclosures exceeded the number of monthly home sales in California in January, according to data compiled by two research companies.
The data is a grim reflection of the worsening housing market, as the number of homeowners who can't or won't make their payments rises and the number of home buyers dwindles.
ForeclosureRadar, a Discovery Bay real estate research firm, said 19,821 California homes went into foreclosure in January, representing about $8 billion in home loans.
Meanwhile, DataQuick reported 19,145 home and condo sales in January.
Sean O'Toole of ForeclosureRadar said he doubts there has ever been another time when the number of foreclosures exceeded the number of sales in a month.
DataQuick's numbers are for closed transactions that occurred in January. ForeclosureRadar uses its own proprietary method of gathering foreclosure data.
"There's no way a market that slow can clear these kinds of foreclosures," said Christopher Thornberg of Beacon Economics, a Bay Area research and consulting firm. "What that number says to me is you have more homes getting dumped on the market in terms of foreclosures than there is demand for homes."
Think about the above statistic for a second. More homes are being dumped back to banks than being purchased in CA. That doesn't even include the homes going up for sale by private sellers and new home builders in the normal course of tranactions.
And new homebuilders continue to build specs in this environment?
How does a private seller or new home builder expect to compete with banks when the banks are taking in more homes than being sold. Compound the above with the fact that mortgage rates have gone up dramatically in the past few weeks, it could even make matters much worse.
We will definitely want to pay attention to these statistics going forward.