Market Update for Week of August 25th, 2009

Orange County continues along a familiar path since May where fewer active listings are entering the market and the number of new homes entering the market are dropping too. At the under $500,000 home prices, approximately 54% of the listed homes category are distressed properties. Meaning either a short sale or foreclosure. It is my opinion that we have hit a bottom at this lower range and I also believe that we now have a sellers market in this category. Buyers out there are experiencing a lot of competition (especially when homes are priced right to sell). It has not been unusual to see multiple offers and buyers in this category are consistently dumbfounded to see this.

Mortgage Delinquency Rises to an All-Time High

According to TransUnion, mortgage delinquency rate - percentage of mortgage holders who are 60 days or more behind on their payments - rose for the tenth straight quarter to 5.81%, in the second quarter of 2009; that is an increase of 65% from the corresponding quarter last year. For the second quarter, Nevada, Florida, Arizona, and California remained the 4 states with the highest delinquency rates; these are the states where foreclosures are the highest. North Dakota, South Dakota, and Alaska had the lowest rates. Delinquency of 60 days is typically a precursor to foreclosure, since homeowners may find it difficult to get current on mortgage payments after two back payments.

While the delinquency rate hit a new high, the increase from the first quarter to the second was 11.3%; in the two prior quarters, the rate rose nearly 16%. "For the first time since the recession began at the end of 2007, the quarter-to-quarter growth rate for national mortgage delinquency shows a decrease," said FJ Guarrera, vice president of TransUnion's financial services division. "I believe this is a precursor to recovery. We see this as a really good sign." However, Guarrera says it will take time for the national delinquency rate to return to its historic level between 1.5% and 2%. "Forecasts are telling us that the recovery will be slow," said Guarrera.