Foreclosure train is coming to a location near you.
May 22, 2008
| posted by:
Andrew C Maleski
There is one on my street. There is probably one around the corner from your house. Foreclosure disease is spreading fast, especially on the lower end of the housing market. The most affected areas are the ones that appreciated last and those where exotic loans were used to finance the purchases. California now leads the nation in the number of foreclosures. In April of this year 243,000 foreclosure notices were sent in our state.
The foreclosure train is now approaching more affluent neighborhoods. In our area including Los Feliz, Silver Lake, Echo Park and Atwater Village foreclosures account now for 10% of single family homes inventory and 5% of the closed sales. This number is expected to grow fast. All of foreclosures in our area are properties listed for sale under $600,000, and most of them are under $500,000. As of May 15, there were 285 properties in various stages of foreclosure in the 90026,90027,90029,90039 zip codes combined.
Every time you look at the property that has been repossessed by the lender, you see overgrown front lawn, neglected empty house, and always unhappy neighbors. No wonder foreclosures have negative impact on the property values in the immediate area. Weak economy, tightening credit, and plunging property values, make it hard for troubled homeowners to sell or refinance. Unfortunately thousands of them will end up loosing their homes in the near future.
In 2004 I read an article titled "House of cards" in The Economist magazine. I copied that article and sent it to some of my clients. The author was painting a scary picture of imminent housing bubble. That bubble finally burst in the summer of last year. It has been a very fast decline from that point. We might be half way through it by now, but we are still far from the end. With the number of foreclosures growing fast, you can only expect more bad news from the housing market. I do not see any silver lining on the horizon. This trend will run its course, most likely over a period of two to three years. The good news is that homes will become more affordable again and at that point buyers will return to the market in big numbers.
Copyright Andrew C Maleski 2008. All rights reserved.