Is The Housing Market Stabilizing? Forecasters Warn That the Dip in Foreclosures May Only Be Temporary
Although overall foreclosure rates were up 2% during the second quarter of 2007, by the end of June home foreclosures nationwide fell just a bit after reaching a 30 month peak during May. However, around the corner millions of adjustable rate mortgages (ARMs) are due to reset, so the lowered statistics may only be temporary. Is this the calm before the storm?
Foreclosure filings in June 2007 were 87% higher than in June 2006, but 7% lower than in May 2007. Thirty-three states reported a decrease in foreclosure filings in June.
Home foreclosures have soared over the past year, but seemed to have let up just a bit during June. The dip is no reason to get excited though; forecasters say to expect another foreclosure filing spike during the fall. It is expected that the states who have already had the highest foreclosure rates in the nation will continue to experience severe problems for the rest of 2007.
Nevada, which was once a real estate investor's dream market, has had the highest rate of home foreclosures in the nation for the 6th straight month, according to June reports. Many speculative buyers have had their high-risk investments turn around and bite them. During June, the statewide foreclosure rate was an unbelievable 1 in 175 households, which is more than 4 times the national average. Statewide home foreclosures in Nevada are down 10 percent in June from May's statistics, but the foreclosure filings are still triple the filings from the same period a year earlier.
During June 2007, Nevada, California, Colorado, Florida, Arizona, Ohio, Michigan, Georgia, Connecticut and Indiana were the top ten states with the overall highest foreclosure rates in the nation.
In Michigan, Ohio and Indiana, high rates of unemployment keep the foreclosure filings coming in record numbers.
California had the highest total number of unemployment filings in the nation. Experts say there have been a high number of home loans made to struggling borrowers and an extremely high rate of mortgage fraud in the state leading to these foreclosure filings.
In Florida, a 3 percent drop in foreclosure filings was seen from May to June, but June 2007 figures for the state are still showing more than double the home foreclosures as compared to June 2006.
On a city level, California cities still have the highest foreclosure rates. In June, Stockton, Merced, Modesto and Riverside San-Bernardino had foreclosure rates which were more than 5 times the national average.
Las Vegas had one foreclosure for every 138 households during June, putting it in 5th place for the most foreclosed on city in the nation. Greeley, Colorado; Detroit, Michigan and Miami, Florida also topped the list of highest metropolitan foreclosure rates during June.
Across the country, housing markets are still suffering with low prices and sales figures. Meanwhile, lending practices are tightening, preventing many homeowners with adjustable rate mortgages from refinancing. As many more ARMs reset in the next quarter, an increase in the already elevated levels of home foreclosures is expected to rise.