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Rising numbers of real-estate owned properties (REOs) and delinquencies are creating excess supply in housing markets across the country, putting additional pressure on prices already under stress from the post-tax credit drop in demand, according to the August report from Metrostudy, a leading provider of secondary and primary market data.
REOs are currently unloading onto the market at a faster rate in a number of the 35 plus markets that Metrostudy tracks, bringing more downward pressure on prices, especially at the higher end and faster in some markets than others.
Cure rates are worsening, which is contributing to an increase in mortgage delinquencies, which now exceed 9 percent overall. There are 2.5 mortgages that have returned to delinquency for every one that has actually improved. Nationally, there are 4 million distressed mortgages (REO, in foreclosure or seriously delinquent). There are also an additional 4.1 million households with mortgages who have more than 50 percent negative equity.
Metrostudy said that the number of households is shrinking as people double up, and increasing excess supply even more. Excess housing is around 2 million, and the loss of excess households is about 1.5 million. As more excess supply is created by the decline in households and new foreclosures, it will be difficult for existing demand to absorb both. "This is further evidence that we have not yet hit the bottom," the report said.
Metrostudy's latest statistics show that sales per subdivision were dismal in May, and only slightly better in June and in July. "California extended their tax credit, but it will not help much. The former fence-sitters already bought, and that has left behind a vacuum of demand," the report concuded.
New home sales contracts per project were down again in June, and ALSO for July versus year-ago, in Phoenix, Las Vegas, and San Diego. Month over month, data show poor sales in June, with a little uptick in July in those markets. In San Diego, June was even worse than May.
From
Real Estate Economy Watch
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