Headlines – Week of July 25, 2010
August 2, 2010
Homeownership Falls to Lowest Level Since 1999
The homeownership rate fell to 66.9% in the second quarter, down from 67.1% in the first quarter, according to the U.S. Census Bureau. This was the lowest level since 1999.
The homeownership rate reached a record high of 69.2% in the second and fourth quarters of 2004.
Rising foreclosures are driving the decline. A record 4.6% of U.S. mortgages were in foreclosure in the first three months of 2010, according to the Mortgage Bankers Association.
Foreclosure activity up across most U.S. metro areas
Households across a majority of large U.S. cities received more foreclosure warnings in the first six months of this year than in the first half of 2009 according to a report at the Associated Press.
154 out of 206 metropolitan areas with at least 200,000 residents posted an annual increase in foreclosure activity between January and June according to the foreclosure listing firm RealtyTrac Inc.
The firm tracks notices for defaults, scheduled home auctions and home repossessions – warnings that can lead up to a home eventually being lost to foreclosure.
The latest figures show the threat of foreclosures is spreading well beyond the top tier of metropolitan areas located in California, Florida, Nevada and Arizona.
Unemployment is now the main driving force of foreclosures.
The Miami-Fort Lauderdale-Pompano Beach metropolitan area in Florida received more foreclosure-related warnings in the first half of this year than any other.
Florida accounted for nine of the top 20 metro areas with the highest foreclosure rates.
The number of households facing foreclosure in the first half of the year climbed 8% versus the same period last year, but dropped 5% from the last six months of 2009.
About 1.7 million homeowners received a foreclosure-related warning between January and June. That translates to one in 78 U.S. homes. According to RealtyTrac, more than 1 million American households are likely to lose their homes to foreclosure this year.
The latest data included one bright spot: Nine of the top 10, hardest-hit metropolitan areas saw their foreclosure rates drop from a year ago. That could suggest foreclosure trends in those cities, including Las Vegas, Cape Coral, Fla., and Modesto, Calif., may have peaked.
The top 10 metropolitan areas with the highest foreclosure rates have remained fairly unchanged over the past 12 months.
The Las Vegas-Paradise, Nev., metropolitan area topped the list with one in every 15 homes receiving a foreclosure warning in the first half of the year – five times the national average. But foreclosure filings declined nearly 9% versus the first six months of 2009.
Rounding out the rest of the top 10 metros with the highest foreclosure rate in the first half of 2010 were
- Cape Coral-Fort Myers, Fla.;
- Modesto, Calif.;
- Merced, Calif.;
- Riverside-San Bernardino-Ontario, Calif.;
- Stockton, Calif.;
- Phoenix-Mesa-Scottsdale, Ariz.;
- Orlando-Kissimmee, Fla.;
- Vallejo-Fairfield, Calif.; and
- Miami-Fort Lauderdale-Pompano Beach, Fla.
The Miami-area metro was the only one among the top 10 to register an annual increase in its foreclosure rate.
Banks Reach 100-Failure Milestone for 2010
On July 23rd, the U.S. reached a milestone of sorts as the number of failed financial institutions passed 100 for this year. Seven banks, variously in Florida, Georgia, Kansas, Minnesota Nevada, Oregon and South Carolina, were seized by the FDIC, making the grand total for the year 103–and counting.
In 2009, there were a total of 140 banks that went belly up; this time last year, only 64 had been shut down. Almost every weekend, the Federal Deposit Insurance Corp. closes a few more and cleans up the mess largely left by bubble-era commercial real estate loans finally dragging their lenders down.
The FDIC had 775 ‘problem’ banks that are at risk of failing at the end of 1Q10, the highest in nearly 17 years. The number was 702 at the end of 2009.
The pace has accelerated as banks’ losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.
By this time last year, regulators had closed 64 banks.
The number of bank failures is expected to peak this year and be slightly higher than the 140 that fell in 2009. Twenty-five banks failed in 2008, the year the financial crisis struck with force, and only three succumbed in 2007.
Posted by Scott R. Lodde