2011 Could Be The Worst Year In The History Of Real Estate
Man, am I glad that I don’t rely solely upon real estate for an income. In fact, I’m really glad we began to diversify when we did. By most accounts, 2011 might be the worst real estate market we’ve seen in a long time…if not the worst ever!
In 2010, banks foreclosed on 1 Million homes. The forecast for 2011 is a 500% increase. The numbers are scary as banks are set to foreclose on over 5 Million homes this year. That’s devastating for the housing sector.
Mortgage holders may take back more homes this year than any other since the U.S. housing meltdown began in 2006.
About 5 million borrowers are at least two months behind on their mortgages and more will miss payments as they struggle with job losses and loans worth more than their home’s value, industry analysts forecast.
“2011 is going to be the peak,” said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc.
The outlook comes after banks repossessed more than 1 million homes in 2010, RealtyTrac said Thursday. That marked the highest annual tally of properties lost to foreclosure on records dating back to 2005.
One in 45 U.S. households received a foreclosure filing last year, or a record high of 2.9 million homes. That’s up 1.67 percent from 2009.
For December, 257,747 U.S. homes received at least one foreclosure-related notice. That was the lowest monthly total in 30 months. The number of notices fell 1.8 percent from November and 26.3 percent from December 2009, RealtyTrac said.
The pace slowed in the final two months of 2010 as banks reviewed their foreclosure processes after allegations surfaced in September that evictions were handled improperly. Under increased scrutiny by the government, lenders temporarily halted taking actions against borrowers severely behind on their payments.
However, most banks have since resumed their eviction processes, and the first quarter will likely show a rebound in foreclosure activity, Sharga said.
Foreclosures are expected to remain elevated through the year as homeowners contend with stubbornly high unemployment, tougher credit standards for refinancing and falling home values.
Sharga said he expects prices to dip another 5 percent nationally before finally bottoming out. The decline will push more borrowers underwater on their mortgages.
Already, about one in five homeowners with a mortgage owe more than their home is worth.
The pain likely will be the most acute in states that have already been hit hard. That includes former housing boom states Nevada, Arizona, Florida and California, along with states that are suffering most from the economic downturn, including Michigan and Illinois.
Nevada posted the highest foreclosure rate in 2010 for the fourth straight year, despite a 5 percent decline in activity from the year before. One in every 11 households received a foreclosure filing last year in the state. In December, foreclosure activity increased 18 percent from November with a 71 percent spike in bank repossessions.
Arizona and California also showed sharp December increases in the number of homes banks took back, at 52 percent and 47 percent, respectively. Arizona, along with Florida, finished the year at No. 2 and No. 3 for the highest foreclosure rates.
One in every 17 Arizona households got a foreclosure filing last year, while one in 18 received a notice in Florida.
California, Utah, Georgia, Michigan, Idaho, Illinois and Colorado rounded out the top ten states with the highest foreclosure rates.
More than half of the country’s foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan.
Together, these states recorded almost 1.5 million households receiving a filing, despite year-over-year decreases in California, Florida and Arizona.
RealtyTrac tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.
Despite this news, I’m sure we’ll see the obligatory response from the National Association Of Realtors and their ilk that now’s a great time to buy a home.
The same old tired mantra is really getting old. Just yesterday, Pete Flint from Trulia said he thinks that the overall real estate market is coming back.
So while 58% of those polled don’t see a recovery happeneing until 2012 and 20% not expecting a recovery until 2015…just who is going to buy all of this inventory?
More importantly, which doesn’t seem to get talked about by the NAR. Where are the buyers, who are willing to jump in, going to get the mortgages to make these home purchases?
Well at least from an investment perspective, there’s going to be a whole lot of prospective tenants out there. If you have cash and buy right you’re going to be able to make a serious ROI.
Hmmm…buying and holding. Now there’s something one might want to look into over the next few years. Just saying.
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Barry Cunningham is one of the Co-Editors of iNEWS and offers a cutting edge and some may say an opinionated view of today's news and current events. Never one to be shy about giving his take on what's happening in the world of sports, politics and business.
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