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Editor's Note: The following is a report by iTulip contributor Sean O'Toole of proprietary timely and accurate foreclosure data only available in graphical form on iTulip.com. Sean's company will launch the data service shortly, available to investors, hedge funds, and government agencies on a subscription basis.
February 2007 Foreclosure Data Alert - March 5, 2007Number of foreclosed homes returned to lenders at auction continue to rise
by Sean O'Toole
Our previous report on January 12, 2007 showed that for Q3’06, California foreclosures were up 111.8% from Q3’05 and 28.3% from the prior quarter. Despite this strong upward trend, most articles invariably followed up this data with a statement such as: Foreclosures are still at historically low levels, and the effect on today’s market is negligible.
The source of these articles is DataQuick. When DataQuick says "historically low levels," they also disclose that they’ve only been tracking foreclosures since 1992, a key fact that many folks who use DataQuick's data don't know is very important. The reason that the start date of comparable foreclosure data for the last cycle is so important is that about two years after the last housing cycle bottom, foreclosures were already declining. If housing were indeed in the process of "bottoming out" now, as many forecast, then foreclosures should be starting to decline. Instead, as we reported last month, they continue to rise rapidly. Note the DataQuick data also show that foreclosures peaked in Q1’96, which correlates reasonable well with the bottom for the housing market. If that pattern of foreclosures repeats, then a bottoming of this housing cycle may not occur before 2010.
February's data support our theory that DataQuick’s data spans a period of time that began during a period of increased foreclosure levels in the last cycle. As a result, we don’t have a clear picture of comparable foreclosure rates for the housing cycle period we are in currently compared to the last cycle, so no one can say whether current levels are "historically low" or not. Even if they are, that may well be a sign of a market peak rather than a bottom, implying further market volatility rather than market stability as usually inferred from the data.
Here is some new data for California that you won't see soon anywhere but here on iTulip.
Enlarge (Number of Properties)
Enlarge (Value of Loans)
A total of $1.5 billion of loan value was returned lenders in February versus $425 million in Sept. 2006.
These data do not support the idea that the market has "bottomed out." Rather, the market is in the early stages of decline.
You heard it here first.
__________________________________________________
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All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer
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by Sean O'Toole
Our previous report on January 12, 2007 showed that for Q3’06, California foreclosures were up 111.8% from Q3’05 and 28.3% from the prior quarter. Despite this strong upward trend, most articles invariably followed up this data with a statement such as: Foreclosures are still at historically low levels, and the effect on today’s market is negligible.
The source of these articles is DataQuick. When DataQuick says "historically low levels," they also disclose that they’ve only been tracking foreclosures since 1992, a key fact that many folks who use DataQuick's data don't know is very important. The reason that the start date of comparable foreclosure data for the last cycle is so important is that about two years after the last housing cycle bottom, foreclosures were already declining. If housing were indeed in the process of "bottoming out" now, as many forecast, then foreclosures should be starting to decline. Instead, as we reported last month, they continue to rise rapidly. Note the DataQuick data also show that foreclosures peaked in Q1’96, which correlates reasonable well with the bottom for the housing market. If that pattern of foreclosures repeats, then a bottoming of this housing cycle may not occur before 2010.
February's data support our theory that DataQuick’s data spans a period of time that began during a period of increased foreclosure levels in the last cycle. As a result, we don’t have a clear picture of comparable foreclosure rates for the housing cycle period we are in currently compared to the last cycle, so no one can say whether current levels are "historically low" or not. Even if they are, that may well be a sign of a market peak rather than a bottom, implying further market volatility rather than market stability as usually inferred from the data.
Here is some new data for California that you won't see soon anywhere but here on iTulip.
Enlarge (Number of Properties)
The number of foreclosures that lenders are taking back in California has increased from an average of 32 a day in August 2006, to 205 a day in February 2007. In dollars that’s an increase from an average of $13.3M per day to $83M per day in seven months.
Enlarge (Value of Loans)
A total of $1.5 billion of loan value was returned lenders in February versus $425 million in Sept. 2006.
These data do not support the idea that the market has "bottomed out." Rather, the market is in the early stages of decline.
You heard it here first.
__________________________________________________
Special iTulip discounted subscription and pay services flogged here:
For a book that explains iTulip concepts in simple terms, see americasbubbleeconomy
For a macro-economic and geopolitical View from Europe see Europe LEAP/2020
For macro-economic and geopolitical currency ETF advisory services see Crooks on Currencies
For the safest, lowest cost way to buy and trade gold, see The Bullionvault
To receive the iTulip Newsletter or iTulip Alerts, Join our FREE Email Mailing List
Copyright © iTulip, Inc. 1998 - 2007 All Rights Reserved
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer
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