Record High Home Foreclosures in Second Quarter

Posted on July 15, 2010

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Is the housing market finally starting to improve?…, not so much.  From the L.A. Times:

The number of U.S. homes taken back by banks through foreclosure hit a record high in the second quarter, even as lenders delayed more homes from entering the process through short sales and loan modification efforts, according to data to be released Thursday.

This growing supply of lender-owned properties could set back the nation’s housing recovery but probably won’t sink it completely if the nation’s employment situation doesn’t deteriorate further and the economy begins to pick up steam, experts said. Sales of homes have faltered nationally in recent months with the expiration of government tax incentives for buyers.

U.S. bank repossessions increased 38% in the second quarter from the same period a year earlier for a record total of 269,952, according to Irvine research firm RealtyTrac. That was also a jump of 5% from the previous quarter. If that pace continues through the year, the number of homes taken by banks is likely to top 1 million by the end of 2010, said Rick Sharga, RealtyTrac senior vice president.

“It is almost a certainty that we will see over a million over the course of the year, and that would definitely be a record,” he said. “It’s serious, but it doesn’t appear to be that these levels will crater the housing market if the economy at least stabilizes and we do start to see some job creation.” (emphasis mine)

I’ve got news for Mr. Sharga who is quoted above.  I don’t think job creation is on the current menu. 

Small businesses, frequently called the “engine” of our economy, are becoming more pessimistic about the economy.  Given “weak sales and political uncertainty,” there’s been a drop in the number of small businesses planning on hiring:

Small businesses grew more pessimistic about their economic outlook in June in the face of weak sales and political uncertainty, the National Federal of Independent Businesses said on Tuesday.

The NFIB’s monthly survey of members showed the small business optimism index fell by 3.2 points in June, dipping to 89, after posting several months of gains.

“Seventy percent of the decline this month resulted from a deterioration in the outlook for business conditions and real sales gains,” the NFIB survey concluded. The report is based on 805 responses to a random survey of NFIB members.

“The performance of the economy is mediocre at best, given the extent of the decline over the past two years,” the NFIB survey concluded. “Pent-up demand should be immense, but it is not triggering a rapid pickup in economic activity.”

Very few small businesses plan to create new jobs, according to respondents. The survey showed that only 10 percent of firms plan new hiring, that is down 4 points from May, the NFIB said. About 8 percent of firms plan to reduce their workforce, up one point from the previous month, the group said.

The long and the short of it?  Hold on to your hats because the ride isn’t anywhere near over yet.

Posted in: Economy