Thursday, August 03, 2006

The Dominoes Begin to Tumble?

News Item: Mortgage Defaults Soar 67 Percent.

Here's the nut:
A notice of default is the prelude to foreclosure, but very few homes end up there. People tend to sell a house before suffering the ignominy of letting the bank seize it.

Even so, the number of foreclosures in the state is rising too. The second-quarter total was 1,901, according to DataQuick, a 215% jump over the 604 in the same period last year.
[Emphasis Added]

"Housing bears will tell you the world is coming to an end," said Scott Simon, mortgage portfolio manager for Newport Beach-based investment giant Pimco. "But by every historical standard, this is still insanely low," he said of the latest DataQuick numbers.

On a scale of zero to 10, Simon suggested, the current level of defaults is about 1.

At the peak of any housing boom, foreclosures and default notices are nearly nonexistent. That's because home values are rising so fast that they cover up any financial missteps by homeowners, who can draw down their equity to get out of trouble.
You hear that, hippies? Enough of your liberal doom and gloom. All is well! Continue consuming!

Of course, Mr. Simon's Fantasy about ever-increasing home prices in his beautiful gated community of Villa-del-Costa-de-Coto-de-Potro de la Brillo de la Princesa is of course predicated on this being some sort of statistical anomaly, a burp after a particularly filling and expensive meal... and not really the first signs that the Superior Vena Cava now resembles the I-110 going through downtown Los Angeles at 5 p.m...

No, just order another drink... you'll be fine...

mojo sends

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