Foreclosure Rates

I've had a couple of questions lately about where to find foreclosure rates by county. Without paying for information, county-level foreclosure rates are hard to find and when you can find them, the numbers are old (HUD foreclosure rates, 2008; New York Federal Reserve Bank, Third Quarter 2010). Some private entities (such as Realty Trac) publish limited free foreclosure information. However, they don't publish their methodology and an analysis of their figures suggest they may leave something to be desired.

However, for Metropolitan Statistical Areas (MSAs), I have found what looks to be some decent free and relatively up-to-date foreclosure data. This analysis of LPS Applied Analytics Data by the Local Initiatives Support Corporation (LISC) is well documented and on-going. And, their methodology is available so the data-user can understand the data itself. You can access their data by clicking here.

I've also thrown together some visualizations of their foreclosure data below. First some definitions:

Foreclosure Rate: Percent of all mortgages in the foreclosure inventory in the reference month.  Mortgages in the foreclosure inventory include those in foreclosure and bankruptcy foreclosures prior to auction or trustee sale.

Prime Foreclosure Rate: Percent of all prime mortgages in the foreclosure inventory in the reference month.  Prime mortgages are those that are Grade A, not a government product or government-insured, and either with 1) credit scores over 720 or 2) credit scores are from 680-719 with full documentation.

Subprime Foreclosure Rate: Percent of all subprime mortgages in the foreclosure inventory in the reference month. Subprime mortgages are those that a servicer coded as subprime or loans made to borrowers with FICO scores below 620 who did not receive a government, Fannie Mae or Freddie Mac loan.

Serious Delinquency Rate: Percent of all mortgages either 90 or more days delinquent or in the foreclosure inventory in the reference month.

90+ Delinquency Rate: Percent of all mortgages 90 or more days delinquent and have not yet entered into judicial or non-judicial foreclosure in the reference month.

Not surprisingly, Utah's poster child for the housing bubble, the St. George, UT MSA (Washington County), shows the rates for most worst measures. On the other hand, it still ranks far below some of the worst MSAs (many in Florida and also nearby Las Vegas). In June 2011, Washington County's foreclosure rate ranking measured 146 and its serious delinquency rate measured 130. The Salt Lake City MSA showed the next Utah highest rankings, while the Logan, UT-ID MSA showed the lowest foreclosure rankings. Hmmm. . .Utah MSAs with the most bubble-like increases in home prices (see the previous post) also show the highest foreclosure rates. While the MSA in Utah with the smallest home-price acceleration during the boom (Logan, UT-ID MSA) shows the lowest foreclosure ranking in Utah. Coincidence? I think not.

You'll also notice that all the Utah MSAs show a decline in serious delinquency rates since the national peak in foreclosures in December 2009. In this case, the St. George, UT MSA has shown the most improvement.

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Luxury student-living complex set to open at USU this fall

Students and faculty at Utah State University can expect an ultra-modern, mixed-use luxury student-living development to be open by fall of this year. The development team of “Blue Square” — the official name of the mixed-use development — have unveiled detailed plans, with artistic renderings, of how they want the parcels at 1135 N. 800 East in Logan to look. The General Contractor, American First Builders — under the direction of developer La Veta Financial, broke ground Dec. 1 on the first three buildings. The foundation, footings and ground floor of one building is done. Herald Journal

Has Utah's housing bubble deflated yet?

Housing bubbles aren't like most price bubbles. Typically, speculation drives up prices (of stocks, crude oil, and back in the 17th century even tulips) like an expanding bubble. Eventually, it becomes obvious that item is extremely over-valued and prices "pop" and collapse. Yes, that's why we call them bubbles.

Remember a couple of years ago when gasoline prices went through the roof? You can blame a bubble market in crude oil. (Some SEC reports indicated that 80 percent of crude oil trading during the height of that price expansion was speculative.) In just seven months, the producer price index (seasonally adjusted) for crude oil went from 339.9 to 108.8. That change represents a decrease of almost 70 percent! Talk about a popping bubble. (And, you might want to note the similarity to the current price increases in oil/gasoline.)

On the other hand, housing bubbles tend to slowly deflate rather than pop. Why? Think about it. If you bought a home at the height of the bubble for $400,000 do you really want to sell it for $250,000? No. Most private individuals aren't able to afford that kind of loss. For many American families, a home is their largest asset. So, if you must sell, you will keep trying to sell at a higher price until the market makes it clear that just isn't going to happen. In other words, home prices are sticky downward, so it will take longer for home prices to deflate after the speculation ends.

It also becomes readily apparent why there is such a foreclosure mess in this country. Obviously, many home-buyers took out loans they couldn't afford in the long run. Then, the recession exacerbated other home-buyers' ability to pay. In addition, even if home-buyers can afford to make their payments, aren't the incentives skewed towards walking away rather than paying off the $400,000 mortgage on a home that is now worth only $250,000?

Well, this housing bubble has certainly taken its time collapsing. However, the market is working her magic and there does seem to be light at the end of the tunnel--at least according to the Federal Housing Finance Agency's Housing Price Index (HPI). (For more information on the HPI see this previous post or the Agency's website.)

(Click on image to enlarge.)

The chart that accompanies this posting certainly provides a lovely portrait of a housing market bubble for Utah's Metropolitan Statistical Areas (MSAs)--particularly for my own Washington County. You can watch home prices explode and then collapse (the chart shows the percent change compared with the same quarter a year ago--which eliminates seasonality).

The Logan, UT MSA (Cache County) seemed to participate the least in the run up of home prices and also appears closest to the end of the price declines. As of fourth quarter 2010 (the most recent index available):

• Logan home prices are down only 1.0 percent compared with prices in fourth quarter 2009.
• Ogden-Clearfield MSA home prices are down 1.8 percent.
• Salt Lake City MSA prices are down 2.0 percent.
• Provo-Orem MSA prices are down 2.4 percent.
• St. George MSA prices still show the largest price declines--4.8 percent.

However, for all MSA the price declines are getting smaller and smaller. The market is making her adjustments. In fact, given current trends, most if not all of Utah's MSAs are poised to see the end of home price declines in 2011.

Cache County sees steady stream of foreclosures in January

Cache County is seeing a steady pace of foreclosures, but the numbers aren't as bad as in other parts of the state.

RealtyTrac.com, a website that publishes the largest database of foreclosure, auction and bank-owned homes nationwide, reported in January 2011 that Cache County saw 76 foreclosed properties, or one in every 467 housing units. That's not as dire as Iron County, which saw 90 foreclosures last month (one in every 207 housing units), or Washington County at 348 closures last month (1 in every 162 housing units).

The website shows that Cache County is in the middle of the state statistically when it comes to the number of foreclosed properties in January. Millard County only had one foreclosure (one in every 4,857 housing units), while Washington County saw the most. Some data for other Utah counties were not available on the website.

Within Cache County, Logan saw 40 foreclosures in January with one in every 557 properties seeing foreclosure. Clarkston was hit the hardest per capita, with two foreclosure properties one in every 138 units seeing foreclosure.

Herald Journal News

Home prices hit post-bust lows in most big cities

Home prices in a majority of major U.S. cities tracked by a private trade group have fallen to their lowest levels since the housing bubble burst. The Standard & Poor’s/Case-Shiller index fell in December from November in all but one of the 20 cities it tracks. The 20-city index declined 1 percent.

The only market to see a gain was Washington, D.C. Along Utah’s Wasatch Front, according to a Jan. 27 report, the residential real estate market, mired in one of the worst downturns ever, is showing a few signs of improvement.

In Salt Lake County, 1,934 existing single-family homes were sold in the fourth quarter of 2010, down 21 percent compared with the fourth quarter of 2009, according to the Salt Lake Board of Realtors. The median selling price was $215,000, down 4.4 percent from the same three-month period in 2009 and off a peak of $256,000 in the summer of 2007. Salt Lake Tribune

Note: The Federal Housing Finance Agency also publishes the Housing Price Index for all Metropolitan Statistical Areas (MSAs). The following chart shows the year-to-year change in the index for Utah MSAs. The most current index is for third quarter 2010. A bottom to housing prices according to this chart would occur when the year-to-year is equal to zero. At this point, the Logan, UT MSA is closest to a bottoming in prices, followed by the Ogden-Clearfield MSA. Not surprisingly, these two areas experienced the lowest level of speculation in the housing market. You can access this information at: http://www.fhfa.gov/Default.aspx?Page=14

Housing for disabled now open in Brigham City

A housing development unlike any other in the state opened its doors two weeks ago, and according to Brigham City's Mayor Dennis Fife, it fills an urgent need in the community. Discovery Place Housing is a place as many as 35 people with disabilities can call home. The apartment building has 15 one- and two-bedroom units, each built to accommodate varied levels of physical and developmental disabilities where residents can live independently. Ogden Standard-Examiner

Home prices still falling in Utah's metropolitan areas

According to information released by the Federal Housing Finance Agency, home prices have yet to bottom-out in Utah's various Metropolitan Statistical Areas. Compared to prices a year ago, St. George MSA prices are down almost 18 percent, prices in the Provo-Orem MSA are down 13 percent and the Salt Lake City MSA prices are down about 10 percent. Both the Ogden-Clearfield MSA (down 6 percent) and the Logan MSA (down 3.4 percent) show slower home price declines.