Last month I wrote about having a little debate with another blogger who viewed the March increase in foreclosures over February as the beginning of a new "tsunami." I countered that the data actually was more consistent with the crest of the foreclosure wave than the beginning of a new one, but that it could also be consistent with there being a lull during the "eye of the hurricane," and that,
if there is a new wave, or a "back side of the hurricane", then the percentages and the raw numbers of foreclosures ought to start increasing quickly. If, on the other hand, the 2nd derivative continues to be negative, then we ought to see foreclosures tip over into YoY negative percentages in the next few months, or certainly by the end of the year.Well, this morning Realty Trac reported that April foreclosures
show[ed] that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 333,837 properties in April, a 9 percent decrease from the previous month and a 2 percent decrease from April 2009....So, here is the updated chart of year over year changes in foreclsoure activity for the last 13 months:
“There were two important milestones in the April numbers that show foreclosure activity has begun to plateau — but at a very high level that will not drop off in the near future,” said James J. Saccacio, chief executive officer of RealtyTrac.
| Month | YoY % change | actual foreclosures |
|---|---|---|
| 04/2009 | +32 | 342,038 |
| 05/2009 | +18 | 321,480 |
| 06/2009 | +33 | 336,173 |
| 07/2009 | +32 | 360,149 |
| 08/2009 | +18 | 358,471 |
| 09/2009 | +29 | 343,638 |
| 10/2009 | +19 | 332,292 |
| 11/2009 | +22 | 306,627 |
| 12/2009 | +15 | 349,519 |
| 01/2010 | +15 | 315,716 |
| 02/2010 | +6 | 308,524 |
| 03/2010 | +8 | 367,056 |
| 04/2010 | -2 | 333,837 |
That certainly looks more like the cresting of a wave than the beginning of a new one.
The genesis of the "second wave" story goes back to stories that started making the rounds in late 2006 noting that mortgage recasts and resets were due to hit in two waves: the first in 2007-08, and the second this year and 2011. I have always been a little chary of that notion, because, while in 2006 lots of people were still deluding themselves that "real estate only goes up!" by 2008 and certainly 2009, they had been disabused of that notion. Thus, a lot of those homeowners, who were probably deeply underwater, already let their houses go into foreclosure, or else worked out a refinancing before now.
With the April data, that scenario is looking more correct. Still, I'm not ready to declare the notion of a second foreclosure tsunami dead yet, because of the lagging nature of YoY data. But another 2 or 3 months like this and it may be "pining for the fjords" ....
