Tuesday, August 26, 2008

Foreclosures: The Oregon Face of the National Story

by Andrew Toth-Fejel, Bankruptcy Litigation Support for Attorneys: Andy@BLSforAttorneys.com

The national news has for a long time been full of stories about huge increases in the national mortgage default and foreclosure rates, and about particular areas of the country that have been hardest hit, such as California, Nevada, Florida, Michigan and Ohio.

But what is the Oregon side of this story? The standard mantra has been that because most of Oregon did not experience the real estate boom nearly as intensely as did so much of the rest of the country, Oregon in general has thus far avoided the worst of the real estate bubble burst. But are there indications that just as the increases in property values started later in Oregon and continued somewhat longer than in other parts of the country, it is just taking longer for the foreclosure wave to hit us?

An Associated Press story on 8/25/08 pointed to a potential danger signal. Although home sales in July 2008 in a 13-state Western region increased slightly compared to July of last year, Portland was among the top 10 metro areas in the nation with the largest drop in home sales. This reduction in sales may well be related to the relatively strong sales that had been still occurring in Oregon compared to the rest of the country back in the comparison month of July 2007, as well as to perhaps some present flowing of real estate activity away from Oregon and to the relative bargains of the foreclosure capitals of Las Vegas and Stockton. But if this reduction in sales continues in the coming months, it may signal that more of the foreclosure tide is more firmly settling into this state.

Showing that this not just a Portland metropolitan abberation, the National Association of Realtors’ second-quarter 2008 home sales data shows that Oregon was 3rd worst in the country (after Washington and Idaho) in reduced sales percentage, at negative 33.5%. Here is the link to a table from the Realtors' group showing this data on a state-by-state comparison:

As to more direct foreclosure information, a company called Foreclosures.com tracks what it calls pre-foreclosure filings, "the first initial notice," presumably recorded notices of default (although it does make its methodology readily available). It reported that in July 2008 Oregon was one of 14 states with a record number of such pre-notice filings for the month, 3,199 of them. For more about this see:http://relistr.com/real-estate/foreclosurescom-pre-foreclosure-filings-set-record-in-july-2008.html

Some addional information to consider as we keep a close eye on upcoming developments:
1) Nationally the delinquency rates and foreclosures have climbed most steeply on subprime mortgages, and in Oregon the percentage of subprime mortgages is lower than for the US as a whole: 9.7% instead of 13.3% of total mortgage loan dollars. And within these subprime mortgages, Oregon also has less loan dollars in the particularly dangerous adjustable rate mortgages: 6.1% instead of 8.8%. (Sources: Freddie Mac and First American CoreLogic, as of 4/08).
2) Homeownership rates are somewhat lower in Oregon: 64.8% compared to 67.3% national average. (Source: US Census Bureau, 2006.)
3) The unemployment rate is currently a little higher in Oregon than the US average: 5.5% compared to 5.3%, as of July 2008. (Source: Bureau of Labor Statistics.)
4) In the calendar year 2007, the foreclosure rate—the portion of households receiving any kind of foreclosure-related notice + REO’s—of the US in general was 1.033%, which was an increase of 79.2% from the 2006 rate; whereas the foreclosure rate in the Portland/Vancouver/Beaverton metropolitan area was only 0.602%, which was a much smaller increase of 24.2% from 2006’s rate (realtytrac.com).
5) For the calendar month of July 2008, the foreclosure rate of the US increased by 8% over the prior month, by 55% over July 2007; for Oregon it decreased by 4% over the prior month, but increased 192% over July 2007. The counties with the worst foreclosure rates: Deschutes, Clackamas, Multnomah, Yamhill, Jackson (realtytrac.com).

by Andrew Toth-Fejel, Bankruptcy Litigation Support for Attorneys: Andy@BLSforAttorneys.com

© 2008 Bankruptcy Litigation Support for Attorneys