Foreclosures shifting to affluent ZIP codes

One analyst doesn't think we have historically high deficiencies right now. I suggest he wait about a year...

The Bay Area is seeing the same trend as So. Cal. Foreclosures are moving to the richer neighborhoods. This is to be expected, since homes with greater than $1 million mortgages have a higher rate of deficiency than those less than $1 million. The article, has some shocking data:

Foreclosures are going upscale across the Bay Area.

Nearly 1,000 homes valued above $730,000 were repossessed by banks in the nine-county region in each of the past two years, according to a Chronicle review of public records compiled by MDA DataQuick, a San Diego research firm. This year is on track for similar numbers, with 223 homes in that price bracket repossessed by banks since January.

This quote would be funny if it didn’t show such ignorance:

“The numbers are certainly high by historical standards,” said Andrew LePage, an analyst with DataQuick. Even more striking is the growth of mortgage defaults – the first step in the foreclosure process – in affluent ZIP codes.

While the high-end numbers are far shy of the massive wave of lower-priced foreclosures, the growth reflects a significant shift in the foreclosure landscape and its underlying causes. Mortgage distress has moved upstream in part because of economic conditions such as unemployment and stock losses. Also in play is a different type of risky loan called option ARM (adjustable rate mortgage) that’s just beginning to cause problems.

Mr. Lepage, may I suggest you refer to the graph above if you don’t think these are “high by historical standards”. What a moron. And you would think he would know this information. Take a good look yourself. We are just beginning to climb the second mountain. I wonder what Mr. Lepage will say in about a year? Hmm?


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