January foreclosures up 57%

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Yawn. Blink blink. Sip coffee. Take a peek at CNN.com. Front page news:

[From January foreclosures up 57% – Feb. 26, 2008]

California had the largest total number of foreclosures among the states. There were more than 57,000 foreclosure filings there in January, one for every 227 homes. Florida trailed well back in total foreclosures with 30,000, but its rate of one for every 273 households was only slightly behind its West Coast rival.

Zoinks. That’s pretty impressive, but remember that this is foreclosure filings, i.e., notices of default, not actual foreclosures of homes. A good portion of people who receive notices of default will be able to cure the default or sell the property via a short sale before the actual foreclosure happens. And, it should be noted, the filings are up 57% year-over-year, not up 57% from the month before.

The article does speculate that the government & lender programs (e.g. Project Lifeline) may be helping to slow the rate of foreclosure filings. I’m a big sceptic on that one. I think that in many cases, folks just don’t see much upside in making exorbitant mortgage payments on a property worth perhaps half of what they paid for it two years ago. It’s one thing to struggle and fight to keep something that’s worth something; it’s another to throw money down a sinkhole of a mortgage where the upside is perhaps many years away.

I think that the wave of foreclosures will keep on surging for the foreseeable future. It hasn’t hit the more affluent parts of Santa Cruz yet, not really – but with the median price dropping in the county the way it did in January, perhaps we’ll see the foreclosure crisis spread from the extremes of the county to its heart. Let’s hope not.

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