I just read a story at Newsmax.com concerning the problems I told you about the banks having to foreclose on underwater homes to save their butts. The story said that the number of underwater homes has declined in the third quarter of this year because of banks foreclosing on more homes and putting them on the market. It said that, as of September, there were 10.8 million homes or 22.5% of mortgaged homes which were underwater. That is down from 11 million or 23% at the end of June. It went on to say that falling property values and unemployment near 10% spurred the increase in foreclosures. This means the banks realized that it is just going to get worse so they are getting out of it as much as they can before the fecal matter really hits the fan, just like I told you they were.
They dumped 110,000 homes on foreclosure auctions per month in the third quarter of this year as compared to 98,000 the same time last year. On auction, homes go for a fraction of their stated value meaning the banks are taking some heavy losses to get out of this mess. Remember this is called damage control or saving your butt.
They are saying that home values will drop 1.7 trillion dollars this year with 1 trillion of that happening in the second half of this year. That is a big 42% increase for just 6 months. They are also saying that the declining home values is causing more homes to sink underwater.
They said that about 2.4 million borrowers had less than 5% equity in their home from June through September for a total amount of mortgaged homes underwater or near negative equity of about 27.5%. Then they said that the value of homes will drop by 11% by the beginning of 2012. That means that anywhere from 30% to more than 35% of the currently mortgaged homes will sink to being underwater in the next year. That is approximately one out of every three homes will be put up for auction within the next 1.5 years.
That is mind numbing. It should be blatantly obvious this is snowballing very quickly right now but is just being covered up by the media to prevent a panic. What bubble?
They say that, currently, Nevada is the worst state with 67% of mortgaged homes underwater followed by Arizona at 49%, Florida at 46%, Michigan at 38%, and California at 32%. When the value of homes drops by 11% in the next year, those numbers will probably increase by at least 50%.
This is even worse than I told you. My numbers are really scary but are very conservative. Wait until they see the unemployment numbers for December in the first week of January. If they are not scared now, they will be then. I think their 11% decrease in home values in the next 12 months is very conservative when all factors are taken into consideration. This just keeps getting worse every time I read the news. This is terrible. I don't care what any of the propagandists say, this is a full blown depression accelerating to light speed. Think Super Depression.
So, how is that recovering economy thing going?