RealtyTrac: U.S. Foreclosure Activity Up 32% from July 2008 and 7% from June 2009

According to this RealtyTrac press release, U.S. FORECLOSURE ACTIVITY INCREASES 7 PERCENT IN JULY, in July 2009 US foreclosures increased by 32% from July 2008 and by 7% from June 2009. According to the press release, July is the 3rd time in the last 5 months that a new record has been set for foreclosure activity. Again, the 4 hardest hit states were Nevada, California, Arizona and Florida. However, there were a many other notable problem areas with Utah at #5, Idaho at #6, Georgia at #7, Illinois at #8, and Colorado at #9. Tennessee ranked 22nd (worse than average), while Pennsylvania, a more stable area, ranked 34th (better than average). A complete list of the July 2009 state by state foreclosure rankings are below (courtesy of RealtyTrac):

U.S. Foreclosure Market Data by State – July 2009

		Properties with Foreclosure Filings
Rate Rank	State Name	NOD	LIS	NTS	NFS	REO	Total	1/every X HU (rate)	%? from Jun 09	%? from Jul 08
--	U.S.	62,939	71,565	104,830	33,557	87,258	360,149	355	6.74	32.32
33	Alabama	0	0	1,630	0	452	2,082	1,026	-23.34	141.25*
24	Alaska	3	0	266	0	102	371	761	76.67	79.23
3	Arizona	2	0	14,120	0	5,572	19,694	135	16.99	47.52
21	Arkansas	104	0	1,319	0	828	2,251	572	35.03*	110.77*
2	California	50,917	0	35,802	0	21,385	108,104	123	6.99	49.55
9	Colorado	5	0	3,947	0	1,536	5,488	388	-4.12	2.08
29	Connecticut	0	1,084	0	190	295	1,569	917	7.84	-22.10
37	Delaware	0	0	0	226	72	298	1304	-12.61	125.76
	District of Columbia	267	0	219	0	35	521	546	24.94	-6.80
4	Florida	0	35,227	0	14,502	6,757	56,486	154	6.78	23.11
7	Georgia	1	0	7,616	0	3,519	11,136	356	-20.59	10.68
15	Hawaii	186	0	481	0	323	990	512	40.23	332.31
6	Idaho	1,290	0	1,051	0	150	2,491	253	32.43*	166.13*
8	Illinois	0	6,770	0	4,060	3,694	14,524	361	34.53	62.92
17	Indiana	0	1,015	0	1,881	2,290	5,186	536	-6.86	8.43
43	Iowa	0	0	227	0	374	601	2,212	7.32	20.68
30	Kansas	0	183	0	408	728	1,319	925	37.68	94.83
39	Kentucky	0	405	0	488	341	1,234	1,545	9.30	0.65
40	Louisiana	0	6	0	928	183	1,117	1,664	-23.07	9.83
41	Maine	0	138	0	212	57	407	1,712	39.38	59.61
11	Maryland	0	3,521	0	633	998	5,152	450	66.19	65.98
16	Massachusetts	0	3,548	0	1,049	517	5,114	532	58.77	43.09
19	Michigan	1	0	2,695	0	5,561	8,257	548	-39.32	-28.76
20	Minnesota	12	0	2,266	0	1,847	4,125	559	23.80	146.86
45	Mississippi	0	0	354	0	124	478	2,625	-36.69	151.58*
27	Missouri	5	0	1,729	0	1,441	3,175	834	2.02	-9.60†
47	Montana	0	0	2	0	88	90	4,839	45.16	-36.62
46	Nebraska	0	164	0	5	26	195	4,004	30.87	-70.45
1	Nevada	7,139	0	7,833	0	4,563	19,535	56	4.11	94.18
31	New Hampshire	0	0	611	0	12	623	954	42.24	-31.01
18	New Jersey	0	4,210	0	1,505	752	6,467	541	49.25	39.92
32	New Mexico	0	479	0	270	128	877	983	23.52	61.21*
38	New York	0	4,613	0	871	470	5,954	1,334	22.76	-3.45
36	North Carolina	1,120	0	756	0	1,552	3,428	1,203	7.97	-20.33
48	North Dakota	0	1	0	26	23	50	6,211	56.25	-23.08
12	Ohio	0	5,062	0	3,032	2,927	11,021	460	-2.05	-18.10
35	Oklahoma	595	0	522	0	420	1,537	1,056	18.69	-11.05
10	Oregon	29	0	2,463	0	1,113	3,605	446	15.80	84.40
34	Pennsylvania	0	1,869	0	1,805	1,642	5,316	1,030	7.59	27.36*
28	Rhode Island	0	0	17	0	488	505	893	-44.63	2.23
26	South Carolina	0	1,209	0	484	735	2,428	833	44.01	82.15*
42	South Dakota	0	60	0	56	48	164	2,178	45.13	446.67*
22	Tennessee	0	0	2,263	0	2,309	4,572	596	-2.20	0.15††
25	Texas	24	0	7,194	0	4,859	12,077	781	0.45	16.64
5	Utah	1,234	0	1,728	0	732	3,694	250	6.42	93.30
50	Vermont	0	0	0	0	11	11	28,312	0.00	120.00
14	Virginia	5	0	3,927	0	2,474	6,406	511	23.48	11.51†
13	Washington	0	0	3,632	0	1,738	5,370	511	14.79	94.42*
49	West Virginia	0	0	119	0	20	139	6,350	21.93	265.79
23	Wisconsin	0	2,001	0	926	890	3,817	671	8.10	86.74*
44	Wyoming	0	0	41	0	57	98	2,473	16.67	-26.32

* Actual increase may not be as high due to data collection changes or improvements
† Collection of some records previously classified as NOD in this state was discontinued starting in January 2009
† Collection of some records previously classified as NOD in this state was discontinued starting in September 2008

U.S. Foreclosure Rates Heat Map – July 2009

A US Foreclosure Rates Heat Map for July 2009 is below (courtesy of RealtyTrac). As you can see, many counties in Tennessee experienced high rates of foreclosure activity in July 2009. Although the map is small (and difficult to tell for sure), it appears that some of the hardest hit counties are Davidson, Williamson and Rutherford. Rutherford County TN appears to have one of the highest foreclosure rates in the entire the state of Tennessee.

After the RealtyTrac press release was issued, a Bloomberg article, U.S. Foreclosure Filings Set Third Record-High in Five Months, obtained additional information from the following real estate sources and experts.

• National Association of REALTORS (NAR) - The median price of an existing single-family house dropped 15.6 percent to $174,100 in the second quarter of 2009, the most in records dating to 1979.
• Zillow - Almost one-quarter of U.S. mortgage holders are now underwater (i.e. they owe more in mortgage debt than their homes are worth).
• Stuart Gabriel (director of the UCLA Ziman Center for Real Estate in Los Angeles) - “There are a slew of factors showing fundamental weakness on the demand side: tighter underwriting, job loss, investors who’ve been badly burned. We have not seen the bottom of the housing market.”
• Diane Swonk (chief economist at Chicago-based Mesirow Financial Inc.) - “We’re in a deep hole. There is a whole new wave of foreclosures tied to the cyclical dynamics of the economy. It has been more profitable to put a home in foreclosure than restructure the loan. The only thing that helps is forgiveness of principal, and there is little willingness to do that.”

The information above from RealtyTrac and the additional information and quotes are all proof that what I said several months ago is true: "The worst is yet to come." The real estate market is still declining and will actually accelerate downward starting in the summer of 2010. The major issues that will continue to harm the real estate market are as follows:

• Continued job losses.
• More and more homeowners underwater.
• Massive government debt which will result in higher interest rates.

There is no way to escape what is coming. All the events that will cause the impending declines have already happened.

4 Reasons the Recent Housing Upswing is Nothing More than a Temporary Slow Down on the Way to the Bottom

The current housing upswing in sales that is leading many clueless media pundits to claim the housing market bottom is near is noting more than a pit stop on the way to the bottom. I believe that this "upswing" is really a mirage. Below are 4 reasons why the real estate market is still headed down.

1. Low priced foreclosure sales are artificially inflating sales figures. However, don't take my word for it. According this Forbes.com article, America's Best And Worst Housing Markets, Stan Humphries, Zillow Chief Economist, states that "In many areas, low-priced foreclosure resales are boosting overall sales, which keeps overall home prices down."
2. Cyclic sales are distorting the sales volume and sales price figures. Don't believe me? That's fine. Listen to a real estate appraiser. "Prices are supposed to go up in the spring; they're seasonal," says Jonathan Miller, president of Miller Samuel, a Manhattan-based appraisal firm. "The seasonality is playing tricks on our eyes."
3. Government meddling is distorting the market. In addition to the normal spring bump in sales volume and prices, the $8,000 first time home buyer tax credit is artificially causing a higher level of sales, particularly on lower priced homes where $8,000 is a larger % of the sale price. Buyers are rushing to buy homes and close on the purchases before the tax credit expires on 11/30/2009. Again, don't rely on me. The same Forbes article quotes Stan Humphries, Zillow chief economist, as stating "Current trends may owe a lot to seasonality and the $8,000 first-time buyer tax credit. As such, current demand may not be based on sustainable market forces. With negative equity rates high and unemployment continuing to rise, we have likely not seen the peak in foreclosure rates."
4. More and more homeowners owe more than their homes are worth. According to the Deutsche Bank report mentioned in my recent blog post, SCARY STUFF: About half of U.S. mortgages seen underwater by 2011, 48% of homeowners will be underwater by 2011. The result of this will be that more and more homeowners will simply walk away from their homes as they give up on the notion that their homes will ever be worth what they owe.