Foreclosures in the US

Top 10 Metro Foreclosure Rates
Detroit, Fort Lauderdale, Denver Top the List
By Rick Sharga November 21, 2006

Elevated foreclosure rates could be coming to a city near you.
Nationwide, 318,355 properties entered some stage of foreclosure during the third quarter of 2006, a 43 percent increase from a year ago and a foreclosure rate of one new foreclosure filing for every 363 households, according to RealtyTrac, an online marketplace for foreclosure properties.
Many cities documented foreclosure rates well above the national average. Leading the foreclosure rate charge were Detroit, Fort Lauderdale and Denver. Completing the top 10 were Miami, Dallas, Indianapolis, Fort Worth, Atlanta, Las Vegas and Memphis. Analysts attribute the sharp increase in foreclosures to higher interest rates, a softening real estate market and the upward adjustment of a large portion of adjustable-rate mortgages taken out in the last few years by many American borrowers.
"In the next 15 months, more than $1 trillion in loans are due to adjust upward," said James J. Saccacio, chief executive officer of RealtyTrac. "With such a large volume of these loans set to increase, it is a trend that definitely bears watching."
Top 10 Cities
Many experts believe the real estate slump could get worse before it gets better. On the other hand, a slow housing market with a glut of foreclosures presents more opportunities for buyers and investors to find bargains and profit from those bargains - if they have the patience to buy and hold. Here's a look at the Top 10 foreclosure cities.
Top 10 Metro Foreclosure Rates - Q3 2006
Metro Area
% of Households in Foreclosure
# Households for Every Foreclosure
Foreclosure Rate to National Average
1. Detroit, MI
1.25% 80 4.5
2. Fort Lauderdale, FL
1.14% 88 4.1
3. Denver, CO
1.11% 90 4.0
4. Miami, FL
1.10% 91 4.0
5. Dallas, TX
1.01% 99 3.7
6. Indianapolis, IN
1.00% 100 3.6
7. Fort Worth, TX
0.99% 101 3.6
8. Atlanta, GA
0.94% 107 3.4
9. Las Vegas, NV
0.87% 115 3.2
10. Memphis, TN
0.70% 144 2.5
% of Households in Foreclosure: Total foreclosures divided by the total households in a metro.
# of Households Per Foreclosure: Total households divided by the total foreclosures in a metro (a.k.a. "Foreclosure Rate").
Foreclosure Rate to National Average: Foreclosure rate in a metro divided by the national average foreclosure rate.

No. 1: Detroit, MI
Detroit's foreclosure rate of one new foreclosure filing for every 80 households was more than 4.5 times the national average. Job losses in the automotive manufacturing sector, a sluggish economy, falling home values and upward-adjusting mortgages are pushing more Detroit homeowners into foreclosure. Detroit automakers and suppliers are cutting thousands of jobs as part of a massive industry restructuring, leaving thousands of laid-off or underemployed Michigan residents swimming in red ink.
And with the auto industry showing no sign of recovery, the future looks bleak for Detroit. The city has lost about 100,000 jobs in the last five years, and total employment is expected to continue to decline until the end of the decade, according to a recent report by Moody's Economy.com.
No. 2: Fort Lauderdale, FL
Fort Lauderdale's foreclosure rate ranked second highest in the nation among major metropolitan areas, with one new foreclosure filing for every 88 households - more than four times the national average.
Like the rest of the nation, the Sunshine State is experiencing a cooling economy, plus rises in property insurance premiums and interest rates. These factors have made it tougher for South Florida homeowners to keep up with their house payments.
South Florida real estate agent Bill Gardner said a lot of properties are sitting on the market unsold because the sellers have financed their properties at 100 percent of what the properties are worth, leaving the sellers no room to reduce their asking price. These sellers are more susceptible to default or foreclosure, especially since investors are now more cautious about sinking money into the housing market.
"Most of the people who are buying now actually need a place to live. And I think all of the investors are kind of pulling out of the market," Gardner said. "My only sales I am making are with people who want to occupy. The properties that are selling are the ones that are under-priced."
No. 3: Denver, CO
Two years ago, the metro Denver region was one of the hottest housing markets in the country. Houses sold in one day for full price. Today, foreclosures are so high in Denver that the state just set up a first-of-its-kind foreclosure help hotline. The hotline received 1,400 calls on the first day.
The Denver region posted the third highest foreclosure rate among the country's 100 largest metropolitan areas during the third quarter of 2006. One out of every 90 households in the metro area entered some stage of foreclosure during the quarter, compared with one out of 363 households nationally. Broad economic factors - such as a housing surplus, stagnant prices, layoffs and the heavy use of adjustable-rate mortgages and interest-only mortgages - contributed to Denver's growing number of foreclosures.
No. 4: Miami, FL
Miami ranked fourth, with one new foreclosure filing for every 91 household, although many of the properties entering into foreclosure in South Florida do not move through the entire process. Steep rises in prices the past few years enable many owners to sell out before losing their properties entirely.
Bill Gardner, the South Florida real estate agent, said buyers and investors should take advantage of the market while it lasts, which he doesn't believe will be for much longer.
"I think after the first of the year people are still going to want to move to Miami," he said. "Even though it's slower now, there are still bargains to be had and now is the time to buy.
"People looking for short-term gains, they missed that boat. But for the long haul it's still a good investment."
No. 5: Dallas, TX
Foreclosure postings in the Dallas area have surged in the past two years, and the city's foreclosure rate consistently ranks among the nation's highest. Interest-only mortgages have accounted for about 10 percent of mortgages in Dallas-Fort Worth this year, according to LoanPerformance, a San Francisco company that collects and analyzes mortgage data.
Stagnated income and rising property taxes have also contributed to the foreclosure spike occurring all over North Texas. More than 9,000 foreclosure filings were recorded in Dallas County during the third quarter of 2006, more than twice the number recorded in the third quarter of 2005.
Dallas real estate agent Jon Callaway said the prevalence of 100 percent financing is pushing many area residents into foreclosure.
"As long as 100 percent financing exists there will be an abnormal amount of people getting into financial troubles and unable to sell their home," he said. "The majority of the homes we see in trouble across the metroplex are 100 percent financing loans."
But Callaway believes the Dallas housing market is showing signs of recovery, an opinion supported by the fact that the area's foreclosure activity rose at a much slower pace than most of the other cities in the top 10.
"Investors from California, Arizona, Florida, Utah and eastern states are soaking up inventory, speculating we are going to be the next hot spot," he said. "I do see us pulling out of the stagnated market we have been in for the last five years and moving forward at a 5 to 7 percent appreciating pace."
No. 6: Indianapolis, IN
Like Detroit, Indianapolis is a big automotive industry supplier that has suffered economic setbacks, and falling home prices have made it more difficult for homeowners in jeopardy to bail out with some profit. Of the top 10 cities on the list only Indianapolis reported decreasing foreclosure rates, with a 2 percent dip from the previous quarter.
No. 7: Fort Worth, TX
In Fort Worth, the median price of a home sold in October - $143,000 - is down 3 percent from last year, according to the North Texas Real Estate Information System. Stagnated income and rising property taxes have contributed to the foreclosure spike occurring in Fort Worth and all over North Texas.
No. 8: Atlanta, GA
Atlanta ranked eighth in the country in foreclosure rate, reporting one new foreclosure filing for every 107 households - more than three times the national average.
"Mortgage fraud, liberal lending practices, and inexperienced investors, along with corporate layoffs and slashed pension funds are contributing causes for the high foreclosure rate," said Atlanta real estate agent Ken McCall.
No. 9: Las Vegas, NV
Experts say Las Vegas is outpacing the national rate as homeowners succumb to rising adjustable interest rates. Some homeowners who bought with no down payment now owe more than their homes are worth. And the foreclosure rate in Las Vegas shows no signs of slowing, with some predictions it could triple in the next six to nine months. One-third of the homes bought in Las Vegas in 2004 and 2005 were purchased using adjustable-rate mortgages. And as mortgage payments increase sharply for those with adjustable rate mortgages, the city's foreclosure rate could continue to rise by the end of the year and in early 2007.
No. 10: Memphis, TN
Memphis rounded out the Top 10 list with a foreclosure rate of one new foreclosure filing for every 144 households. The city's foreclosure rate was more than 2.5 times the national average and was up 2 percent from the previous quarter.
Memphis broker Tommie Criswell-Jones said foreclosures are present for a variety of reasons, including high-ratio loans, bankruptcy frequency, poor underwriting and mortgage fraud. She said Memphis ranks No. 8 in the country for mortgage fraud.
Criswell-Jones noted that the Memphis market is "slow and steady" and has not seen the dramatic increases in home prices in recent years. She cited strong consumer confidence and recent corporate relocations as factors that will help create a more balanced housing market in the near future.
"Sections of our MLS area have higher inventory than demand, but in those areas sales are still considered strong," she said. "We expect to see the local housing market adjust somewhat in line with the national trends, with a gentle slowdown in new home starts. We expect a more balanced market with sellers and buyers, and sales are expected to be at or slightly above 2006."

And I thought being in the doghouse was a bad thing...

Daily Real Estate News December 1, 2006
Sell a Fancy Dog House, Earn a Commission

The housing market is going to the dogs – literally.Doggie Mansions, a company in West Palm Beach, Fla., that builds designer doghouses priced anywhere from $10,500 to $100,000, is offering 10 percent commissions to real estate professionals who make the sale.
Partners (and dog lovers) Stacy Small and Donald Gorbach, a veteran real estate practitioner, started the company last summer and quickly realized the value of paying commissions. "On a $25,000 home, the commission comes to $2,500, and [real estate practitioners) don't have to split it with anybody," says Small, who goes by the title Chief Barketing Officer. "This way we can have a sales force in place."
Cincinnati Bengals quarterback Carson Palmer is among the company’s customers. He spent $25,000 on a two-story, brick-faced Doggie Mansion for his three dogs – two Rottweilers, Chuck and Homer, and a Maltese named Muffin. The 8-by-10-foot luxury dog retreat is equipped with air conditioning, a brushed micro-velvet suede couch, ceramic tile floors, large arched windows, a flat-screen plasma TV that loops classic canine movies like "Benji" and "Rin Tin Tin" and, of course, football-shaped doggie beds. The mansions take two to four weeks to build, and can be shipped around the world.
The company's Web site, www.doggiemansions.com, includes listings of dog houses.

What Do Buyer's Want?

From Real Trends Email Update #858, dated November 29, 2007:

===What is today's consumer's #1 incentive in buying a home?===
When consumers were asked recently what incentive appeals to them most in buying a home, three out of four chose “closing costs paid.” “Not surprising, this would represent a bottom-line savings of several thousand dollars in normal closing cost fees and services,” noted Michael Bearden, president and CEO of HouseHunt, Inc., a consumer-oriented Internet firm which conducted the national e-mail random survey. “In contrast, only two percent of respondents chose a paid trip or vacation as their top incentives.”
Placing a distant second in the homebuyer incentive survey was “free upgrades,” with nine percent of the vote. In third place at six percent was “free property inspection.” Then came “free appliances” and “flooring credits,’ at three and two percent respectively. The incentive scoring last at one percent was “landscaping credits.”Added Bearden: “Our latest national Current Market Conditions survey showed the seller-buyer ratio at 52%-36% ratio, with 12 percent reporting 50-50.
The survey also showed that it is taking longer to sell a home – 74 percent said more than 60 days -- with only 51 percent of sellers getting more than 95 percent of their asking prices. Only 11 percent reported price appreciation of 10 percent or more in the past year. Multiple offers have almost disappeared. We anticipate that results from our fourth quarter market conditions survey in late December will be similar.”