Mortgage Defaults Rising In Higher Priced Neighborhoods

By Justin Gardner | Related entries in California, Economy, Housing

It’s happening a lot more now that other loans besides the subprimes are coming due.

From North County Times:

Ward Hanigan, a San Diego investor who purchases foreclosures, agreed that the longer foreclosure procedures produce artificially low inventory numbers, with no recovery in sight for the region’s housing market.

“It’s like an oil pipeline; it used to be five miles long and it’s been stretched three more miles,” Hanigan said. “So now it’s dribbling out until it gets full. And that’s what happening, it’s getting full. And then it’s going to gush.”

Default notices shot to new highs in areas of Carlsbad, Rancho Bernardo and Rancho Penasquitos. On the other hand, notices in foreclosure-prone neighborhoods such as Oceanside and Escondido were below peaks reached earlier.

In fact, one region of Rancho Bernardo saw more default notices in March per 1,000 homes than Oceanside’s 92057 ZIP code —- the most foreclosure-prone neighborhood in North County over the last two years.

But in Southwest Riverside County, there was no indication of a plateau for the most foreclosure-prone areas.

A ZIP code in Temecula shattered the regional high for most default notices in a month with 252 in March, cementing Southwest Riverside’s status as the leader in foreclosures locally. By contrast, the most default notices ever seen in a North County ZIP code was 127 in north Oceanside’s 92057 in July 2008.

No doubt this is happening a lot more in places where speculation ran wild, but in locales like my stomping grounds of Kansas City…prices have remained fairly steady. Maybe it’ll hit us eventually, but maybe we just didn’t have as many people acting irresponsibly and buying more house than they could afford.

Thoughts?


This entry was posted on Wednesday, April 15th, 2009 and is filed under California, Economy, Housing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Mortgage Defaults Rising In Higher Priced Neighborhoods”

  1. kranky kritter Says:

    There are some people somewhere who know almost exactly where and when it’s going to go sour, and how sour. Bad loans of various types were NOT spread evenly across the nation, nor throughout time.

    The places that had the greatest artificial appreciation over the past decade will be hit the hardest. Places where price growth was more in line with income growth will fare better.

    One thing you’ll likely see is a lot of defaults and big price drops in the mcmansion developments. Because so many of the bad loans went to people buying new 4 and 5 BR homes. The 4 and 5 BR 3 garage houses were comparatively rare beasts prior to the just popped bubble.

    To get out of the crash era, these homes will have to be priced based on what the pool of viable buyers can afford to pay. Numbers vary by region and cost of living, but let’s use my area as a ballpark. We saw many mcmansion developments with prices in the 500 to 750k price range. That’s beyond the ability of most folks to pay, and if we see lots of defaults, those prices will have to drop down to the 350-500k range.

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