Notices of Default are Getting Ugly

[barnaby33]

Seems to me that the chart indicates a drop-off in resets between the middle of 08 to the middle of 09.

What I find interesting is how quickly we approach 100% reset on arms, such that by 2010 almost all have reset. This means that very few people took out the 10 year ARM, most took out the far more volatile versions. This rests on the assumption that usage of ARMs really only ramped up in the last 5 years.

Josh

[Anonymous]

Well, I didn’t post this last week, when the San Diego numbers came out, because I assumed that everyone had seen the data in the Union-Buffoon. But, since hipmatt posted the new thread on the California numbers, I thought that I should post my updated chart on the San Diego numbers:

[img_assist|nid=2483|title=|desc=|link=node|align=left|width=466|height=267]

Yep, it’s getting really ugly, really fast here in San Diego.

All three leading indicators of increasing home prices — declining NODs, increasing sales, and increasing employment — are moving in the wrong direction. I’d hold off on buying, now, because the ‘fun’ has just begun.

[PerryChase]

Great chart, jg. If there’s one thing that we agree on, it’s housing. 🙂

[Anonymous]

Question — why focus on NODs? Why not focus on foreclosures? Not all NODs result in foreclosures.

True, not all NODs result in foreclosures. But, NODs are a highly reliable predictor of foreclosures, both up and down:

[img_assist|nid=2484|title=|desc=|link=node|align=left|width=466|height=350]

NODs ‘lead’ (anticipate, predict) foreclosures by six-to-nine months (eyeball estimate).

Foreclosures are better, but NODs are good enough and move up or down six-to-nine months sooner.

[barnaby33]

It seems to me that as long as you know the ratio of NOD to actual default NOD is a more sensitive measurement. Sure most NOD don’t go through actual foreclosure, but as long as the ratio is constant, its just as good. Furthermore it gives you an idea just how many people are running right up to the edge.

Josh

[no_such_reality]

Foreclosures are rocketing faster than NODs.

Last year, NODs where 15000 at this time, with 900 foreclosures, this year, it’s 37000 NODs and just over 6000 foreclosures.

That’s 1 in 6 NODs going foreclosure before the market softens in OC/LA.

[Anonymous]

nsr, given that NODs lead foreclosures, and that the rate in NODs is now increasing, it makes sense to me that the rate of change in foreclosures could be changing even more quickly, now.

Josh, I think the important thing to watch is when NODs stop increasing and consistently start decreasing. That means that foreclosures will do the same 6-9 months later. When NODs (and foreclosures) drop to normal levels, downward pricing pressure on homes will be coming off, giving a signal that prices could soon start increasing.

At least that’s how it sorts out in my mind.

[Diego Mamani]

JG, great graphs! Thanks. I’ve seen some data the last few weeks (can’t remember where) showing the the % of NODs resulting in foreclosure has shot up in the last half year or so. In other words, your NOD graph understate the ugliness of the housing market that we have in front of us. This spring-summer we’ll see some substantial price cuts, more so than in 2006. Enjoy the show.

[DaCounselor]

“When NODs (and foreclosures) drop to normal levels, downward pricing pressure on homes will be coming off, giving a signal that prices could soon start increasing.”
_____________________________

What are “normal” levels of NODs and foreclosures? What historical data, if any, is out there regarding monthly and/or yearly NODs and foreclosures? How far back does the data go? Are we coming off an historically low rate of NODs and foreclosures, such that the recent increases are merely bringing us back up toward the historical average? And what is the historical average? And shouldn’t the raw NOD and foreclosure numbers over the years be expressed as a percentage of the raw number of loans so that one arrives at a ratio of NODs and foreclosures to total loans existing? Isn’t the creation of such a ratio the only way to accurately measure where the current level of NODs and foreclosures rank in terms of severity?

I think these are some of the key questions that have to be addressed if one wishes to truly get an accurate picture of what the NOD and foreclosure numbers mean today.

[Diego Mamani]

Someone posted this site either in this blog or in Ben Jones'. It shows foreclosures going back to 1982; you can select any start and end years. You can see how current numbers are not that high, but the speed at which they are growing is mind blowing. And to think that the "correction' (as industry shills call it) has only started!!

http://www.sddt.com/Finance/EconomicIndicators.cfm

 

[blahblahblah]

Great graph jg, it brings to mind Slim Pickens at the end of “Dr. Strangelove”:

“YEEEEEEEEE-HAAAAAWWWWWWWW!”

[no_such_reality]

Changing that graph to be 1982 to 2006, I’d say under 200 is a bull market, over 300 is a rough market and over 400 is a ugly bear market.

Looks like we’re in the 300-350 range now and going up like a rocket.

[rockclimber]

jg, I hope you’ll keep posting the updated numbers monthly. This is really good stuff.

[Anonymous]

DaCounselor, you are right, technically, that NODs/foreclosures as a proportion of number of loans outstanding would be a better indicator of ‘sickness’ or ‘health.’ Unfortunately, number of loans outstanding for San Diego is not something that I see reported regularly (and then how do you tease out first vs. second mortgages, etc.).

rockclimber, unfortunately, DataQuick only makes quarterly public releases of NODs and foreclosures regularly. Occasionally, I’ll see a monthly NOD/foreclosure reported between quarterly reports, but nothing consistent. Hence, I wait for the quarterly report.

[Anonymous]

DM, yep, that’s a fun feature in the SDDT; thanks for the reminder.

[Author]

Posts