One percent of owners facing foreclosure
A series of reports out sketched a bleak picture of the nation's residential real estate, with nearly 1.3 million homeowners in some state of foreclosure last year, 13 metro areas posting record price drops and a record number of vacant homes for sale.
Nationwide, about 1 percent of homeowners were facing foreclosure during 2007 - a 79 percent jump from 2006 - according to RealtyTrac. And the number of homeowners entering foreclosure is expected to rise sharply this year, despite efforts by lenders to renegotiate mortgages.
Lenders have pledged to help some of the hundreds of thousands of homeowners who are struggling with subprime adjustable-rate mortgages. But so far, they're "at best having a marginal effect on (foreclosure) rates, because of the sheer volume of properties we're talking about," says Rick Sharga of RealtyTrac. In fact, Sharga says, the rate of homes entering foreclosure accelerated at the end of 2007.
Compounding the misery for many homeowners are falling home prices, which erase equity and in the worst cases can leave a homeowner with a mortgage that exceeds the value of the home itself. Prices in November fell in 17 of the 20 metro areas tracked by Standard & Poor's Case-Shiller index.
Worst hit: Miami, where prices plunged 15 percent from November 2006, followed by double-digit declines in Las Vegas, Detroit, Phoenix, Tampa, Los Angeles and San Diego.
"We reached another grim milestone in the housing market in November," says Robert Shiller, chief economist at MacroMarkets and co-developer of the index.
The housing recession has also battered companies tied to the real estate industry. Countrywide Financial, the nation's largest mortgage lender, reported Tuesday a $422 million loss for the October-December period, compared with a $622 million profit in the fourth quarter of 2006.
In addition, the U.S. Census said Tuesday that about 2.18 million vacant homes were for sale in the fourth quarter. That's 2.8 percent of all homes, up slightly from the third quarter, and it ties the record-high percentage at the start of last year.
Patrick Newport, U.S. economist for Global Insight, says he's concerned that about 800,000 more vacant homes are for sale than would be the case in a normal market. That extra supply weighs down home builders and squeezes homeowners who want to sell.
Construction permits to build homes are off 56 percent from their peak two years ago, and Newport says they'll have to fall further.
As for home prices, he says, "I see prices dropping 10 percent from where they are now, and it could be a lot more because the inventory figure hasn't budged."
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