RealtyTrac(TM) released its US Foreclosure Report this week showing that 318,355 properties nationwide had entered some stage of foreclosure during the 3rd quarter of 2006. The THIRD QUARTER! That is a 17% increase from the previous quarter and a 43% increase from the 3rd quarter 2005. That is a national foreclosure rate of one Lis Pendens filed for every 363 households in the US.
Mortgage industry experts are saying that higher interest rates and a soft real estate market are the two key contributing factors. These people are brilliant.
The first wave of Adjustable Rate Mortgages are adjusting following the initial fixed rate period. With the proliferation of 100% financing and low down payment ARMS these homeowners have no equity with which to refinance and must bear the full burden of interest rates and increased monthly payments. This is the driving force behind the escalating foreclosures with no end in sight.
The volume of these loans are standing at more than $3 trillion dollars, more than $1 trillion of them are due to adjust over the next 15 months. What do you think will happen to the real estate market when that happens?
This could turn out to be a real buying opportunity if housing prices take a 20% hit in the coming months. Real estate is still a great investment unless you decide to buy at the market top with no down payment. More on this later.
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