Are foreclosures on the rise? According to the ATTOM Data Solutions, there was a total of 56,251 U.S. properties with foreclosure filings in January 2019, an increase of 8 percent from the previous month but down 19 percent from a year ago.
However, 60 of the 220 major metro areas have posted a year-over-year increase in foreclosure activity. The metropolitan areas included, Orlando Florida (up 72%); Austin Texas (up 60 percent), Miami Florida (up 41 percent); San Diego, California (up 12 percent).
However, am I surprised to find foreclosure rates on the rise? Not really. 2018 sparked the rise in interest rates, causing some ARM (adjustable rate mortgages) to increase mortgage payments.
Naturally, some homeowners would consequently default on their mortgage payments. Also, consumer debts are constantly hitting all-time highs, putting more pressure on homeowners to pay their mortgage bills.
Let’s not forget the number of store closures and layoffs that have been announced just this year alone are staggering, and there’s no doubt this will hurt homeownership.
More Pending Foreclosures?
Furthermore, completed foreclosures or repossessed real estate owned (REO) were up 18 percent from the previous month but down 54 percent from a year ago.
The REO number indeed goes against the trend; however, it could be that there are a lot of pending foreclosures that just have not completed yet.
According to Arm Loftsgordon from Nolo, in the second quarter of 2018, the average number of takes to complete a foreclosure process was 720 days. Depending on the state, the foreclosure process could take from 150 days to roughly four years.
Are the consumer tapped out? I believe so. Also, I think we’re beginning to see a negative trend in our economy. Although 2018 had a 3% GDP (could be revised downward later), the economic trends are looking bad for 2019.
The Fed Doubles Down
Just recently, the Federal Reserve announced that there would be no rate hikes for 2019. If the economy were strong, the FED would have continued the rate hiking process and the shrinking of their balance sheet.
It’s quite clear; the FED has noticed something wrong with the economy.
The first sign of weakness is rising foreclosures, and they’re trying to do everything in its power to stop the economy from imploding.
However, there was no escape the moment the FED lowered rates and started quantitative easing.
Now it’s just a matter of time before the air come out of this bubble, and when the air goes out, I know where I am going to be. I’ll be with my commodity stocks along with gold and silver.
There’s no telling what the FED will do to stop this bubble from imploding. If I had to guess they’re going to start the inflation process all over again. However; this time it won’t be pretty.