BC Foreclosure Update

Over on Vancouver Condo Info, Ham Solo shares the data from BC Foreclosure filings for Oct. 31, 2013 and month to date totals. From Ham:

At the end of the first month of daily data. Vancouver stayed running at a fairly steady pace of six filings per working day. So big picture, what is going on with British Columbia foreclosures? First, I think one needs to understand the data. Courts aren’t located in every municipality, so “New Westminster” foreclosures probably include Port Moody or Coquitlam, while “Nanaimo” might include Qualicum Beach etc. That being said we can get a pretty good look at what is going on regionally.

The basic situation is that the periphery is doing worse than the big city. If I annualize the data by population, the Lower Mainland as a whole is running at about 0.7 annual foreclosures per 1000 population. That compares to Vancouver Island with a run-rate of 1.3 foreclosures/1000 pop; Okanagan at 1.8 foreclosures/1000 pop; and Kootenays and North maybe running 2-3 foreclosures/1000 pop with those last two regions most susceptible to problems in counting and defining the right regional population number.

Turning to lenders, I think the basic model of all the banks, roughly in proportion to retail market share, is to write any old mortgage at any old level to someone that can be covered by CMHC/Genworth wrappers. There is no bank that seems to be extra careful … Royal’s share this month is a bit lower than I would have expected, CIBC’s a little higher. The specialty mortgage co’s are active across the province and must be punching much higher than their weight in terms of foreclosure volumes to mortgage assets. Credit unions, whom I thought might be the loosest lenders of the bunch, seem to be there in about expected market share.

We clearly are not in a meltdown. I’d be interested if other readers have the data on what the foreclosure numbers per 1000 pop got to in various US states. However, we have a good sense of the base. This data series will probably spike at some point, maybe beginning next month, maybe beginning in 3 years, I can’t say. Like others, I’ve been surprised at how well prices have held up and how few foreclosures have occurred to this point. However, I suspect that 20-40% of current “homeowners” would be in serious trouble at either in a 5% interest rate environment or in a material recession regardless of the rate picture.

As there is a little repetition in the daily numbers, going forward I will share the data weekly.

A big thanks to Ham for his efforts.

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Wed Post #1: Inventory Tracker Stats

A number of you have been asking about the Inventory Tracker stats on the sideboard.  The blogger widget has not been functioning for the past few months so we've been unable to make updates.

Today we were successfully able to delete the widget and re-enter the monthly totals.  Regular daily entries will resume starting in November.

Speaking of stats, below is a screenshot from VCI of Ham Solo's latest foreclosure statistics for you (click to enlarge):

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Vancouver's foreclosure rate running at 6 per day in October 2013

As mentioned in the last post, Ham Solo has been posting daily foreclosure data on cases filed in BC over on the blog Vancouver Condo Info.

As of October 10th, there have been 48 foreclosures in the City of Vancouver.

That's a rate of 6 per business day at a time when record setting cheap interest rates are supposed to help people pay off their debts.

It speaks volumes.

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Pre-sales closing crunch in Toronto? And... Vancouver foreclosures running at 6-7 per working day.

Debt is endemic. They use lines of credit to make mortgage payments. They routinely increase the size of their home loans to renovate. Four in ten people now say they have trouble paying their monthly bills. And yet 70% own a house. Prices have been bloated by cheap money, not greater income.

That's a quote from one of Garth Turner's posts (May 16th, 2013)

"Endemic Debt" comes to mind when you read this article in yesterday's Toronto Star - Toronto real estate: Condo buyers ‘scrambling' to close deals: Mortgage brokers have seen a surge in people who bought pre-construction condos a few years ago and are now “scrambling” to get financing to close deals.

Mortgage brokers, realtors and developers have seen a surge the last few months in people who bought pre-construction condos two to three years ago “scrambling” to get financing to close deals. 

Some have had to walk away from deposits worth tens of thousands of dollars. Others have been forced to borrow from family — or against their principal residence — to come up with final payments on condos that lenders are no longer keen to finance, according to interviews with a number of players in Toronto’s condo industry. 

Hardest hit have been the self-employed who had pre-approvals from lenders when they bought their pre-construction units. But now, with the unit almost complete and final payments due, they are being told they need 35 to 50 per cent down, instead of just 20 per cent of the purchase price, unless they want to rely on secondary lenders offering rates that can hit double digits. 

Many investors who bought units intending to flip them on completion, or rent them out for a few years, have also been shocked to find they thought they had pre-approvals, but they are no longer being honoured in the wake of tighter lending rules imposed by Ottawa.

Can you imagine what things will be like if the Federal Government responds to the idea that mortgage debt is a threat to the economy?

Or if interest rates really do start to rise?

On another note, an interesting post over on Vancouver Condo Info from Ham Solo

From the start of the last paragraph: "Looking at a couple of weeks of data, adjusting for double-counting, we are seeing Vancouver foreclosures totalling about 6-7 per working day."

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