Market Update
Mindlessly citing statistics is not my idea of delivering compelling information worthy of your weekly attention. But occasionally it is important to keep abreast of certain key market indicators in order to have a firm understanding of what's happening in the market. To that end, approximately once a month I will write an article containing important market data. In 2008 a total of 437,955 Notices of Default were filed according to ForeclosureRadar.com. This constitutes an increase of 56 percent over the 279,821 Notices of Default filed in 2007. Prior to the current housing crisis, the prior record for Notices of Default was set in 1996 at 223,791 as reported by MDA DataQuick historical statistics. Properties sold at auction increased by 158 percent by volume over 2007, and 179 percent by combined loan value. Lenders took back a total of 241,093 properties, with a combined loan value of $103.9 Billion. The prior record for total foreclosures (i.e., properties taken back by lenders as well as properties acquired by third parties at the trustee sale) was set in 1997 at 76,276. These are pretty staggering numbers. When you combine those numbers with the fact that over 50% of all the loans being modified are going back into default, the picture grows bleaker.
Last year I explained that record foreclosures are pushing prices down despite an uptick in sales volume. In response, many of you asked whether that means people who buy now may experience further price erosion before the market bottoms out. Well, as accountants like to say "that depends". If you are buying a home and you are paying market price, there is a good chance that you will see prices come down before they go up. However, if you are an investor and you are buying discounted properties 20-25% below market, you are competing against multiple bidders which will tend to prevent further deflation from that discounted price.
Whatever your motive for buying, at some point it is in the best interest of the overall economy to stop setting new records for notices of default and foreclosures.
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LOL - Laughs OnLine
"I should have taken the job at the petting zoo."
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What's The Big Idea? 
Centaur or Minotaur
Having sworn in a new president it seems appropriate to take a moment to reflect on what economic system we believe we have. In the late 1800's we decided we didn't want nine year old girls working in coal mines for 12 hours a day. So the capitalism born of the industrial revolution was tempered. We then spent most of the 20th century watching the experiment with Communism, hailed as the answer to the nine year girl's predicament, fail miserably. Towards the end of the 20th century, we renewed our commitment to the free market, much to the delight of the Chicago Business School, even as we continue to borrow aspects of the socialist agenda like welfare and minimum wage. At the beginning of the 21st century we have begrudgingly allowed the federal government to take an ownership interest in major financial institutions in the name of propping up the economy, which feels a lot like a textbook communist strategy called nationalization. For the most part, we agree that the exigencies of the day necessitated such drastic measures. And as such, we still view ourselves as fundamentally a capitalist society. So the question is what are we really? Seems to me we are beginning to look more like some exotic hybrid creature from Greek mythology that still has no name. Email me your thoughts.
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Share If You Care
Our goal with this newsletter is simple: Cover every important topic that might help homeowners and investors make more informed decisions concerning real estate. You can help in two ways:
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Sincerely,
Kwame J. Granderson
Equinaire
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Did You Know
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Did you know that every day more money is printed for Monopoly than the US Treasury?
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