Foreclosures Climb Again

Property Wire reports that Texas is now leading the real estate crisis in the US with a 35% increase in February in the number of foreclosed properties according to the latest figures.

The articles stated; “It was the highest monthly gain of any state in the country, according to data from ForeclosureListings.com”. The information was gathered from foreclosurelistings.com, an online foreclosure marketplace.

Michigan had the second highest increase at 17.5%, followed by California at 11.9% and Florida at 4.7%. Other states that continue to experienced high foreclosure rates are Georgia with 5.5% and Arkansas 28.6%. One in every 418 homes received a foreclosure filing, reaching more than 300,000 for the 12th straight month, according to the report which describes the current situation as bleak.

Las Vegas led all cities with the most foreclosures in February with more than 3,100 filings, a 29% increase from January. Denver had the second highest foreclosure gains among cities with more than 2,000 filings in February, despite the 5% drop from the month before. The 34% increase in Phoenix pushed that city to the third spot with more than 1,600 filings.

The National Association of Realtors (NAR) believes that there is little chance of home prices increasing as long as foreclosure rates remain high and ongoing. A fall in the number of sales of previously owned homes in the in February is also sure to hurt home values again.

The report from NAR showed sales fell 0.6% in the month of February to an annual rate of 5.02 million units. That’s from 5.05 million the previous month. Las months delicne was the third consecutive month sales have dropped.

The trend has raised concerns that the market may be heading for a double dip in both activity and prices. Chief Economist Lawrence Yun, with NAR, said; ‘Although sales have been higher than year ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment.’

Meanwhile, Treasury Secretary Timothy Geithner said fundamental reform of the property market is needed. ‘The housing finance system clearly cannot continue to operate as it has in the past. Fundamental reform is required with stronger regulation, more effective consumer protections and a clearer role of government with less risk borne by the American taxpayer,’ he said.

The role of government in free enterprise, especially where real estate investing is concerned is uncharted territory. Does heavier regulation mean price controls? Do those controls portend a maximum price/sq.ft. that can be charged for rent or for purchase?

Nobody knows the answers to these questions or what affect it will have on the real estate investment community? The only sure thing based on today’s data is that the Banks have paid back the TARP funds and now are taking the opportunity to finish the ugly task of cleaning up their balance sheets.

As banks continue to get their fiscal houses in order this summer investors can expect sliding home values and more foreclosure buying opportunities as we enter the predicted double dip recession that many economist have predicted.