Foreclosures Stay Near Record Highs, Won't Peak Until Late 2010

The carefully watched monthly RealtyTrac data on foreclosures was released earlier today and it paints a picture of a national foreclosure situation that is not improving and is not likely to improve until a year from now.

The new data from the service shows foreclosure filings were reported on 358,471 U.S. properties during August, a decrease of less than 1% from the previous month but still an increase of nearly 18% from August 2008. The report also shows one in every 357 U.S. housing units received a foreclosure notice in August.

With one in every 62 housing units receiving a foreclosure filing in August, Nevada continued to document the nation’s highest state foreclosure rate despite an 8% decrease in foreclosure activity from the previous month. Florida documented the nation’s second highest state foreclosure rate, with one in every 140 housing units receiving a foreclosure filing, and California finished third, with one in every 144 housing units receiving a foreclosure filing.

RealtyTrac does not expect the rate of foreclosures to get better for several quarters because that pace is much worse than the firm has forecast. Rick Sharga, one of the top executives at RealtyTrac, said “We had been thinking that this year would be the peak, but at the rate things are going right now, it’s appearing more likely that late 2010 might be the peak year before things start to moderate.”

The news means that housing prices, while they may be stabilizing in some markets, are not likely to move up for some time. The supply of homes that are in foreclose and those in which mortgage holders are in default is simply too high. The number of houses being sold by banks to recoup some of their loans will continue to flood the market with relatively inexpensive inventory.

Despite some very modest signs to the contrary, the housing market is not getting better.

Douglas A. McIntyre