Foreclosures Vs. Delinquencies

Housing has stabilized with the 100% help of the Federal Government. Last months S&P Case-Shiller Home Price Index grew 1.2% MOM, and expanded for the third month in a row. This would appear to many that housing is recovering. Well. Let me give you two graphics that will make your jaw drop.



The above graphic shows the gap and disparity between delinquenices and foreclosures. As you can see, delinquencies are rising, but foreclosure starts are not. This gap has almost doubled. I can only say that all of this activity is "shadow foreclosure inventory." Higher unemployment begets delinquencies and defaults, but foreclosures aren’t flowing through due to modification efforts and other various reasons, specifically banks don't have the horses to get foreclosures going and they don't want the inventory on their books.

Not only that, once you get the foreclosure process started, it’s taking a while for the foreclosing lender to actually get the homes on the market.



What this means is that a full 12 months after the foreclosure process is started, 30% of these homes are still caught up somewhere in that process and have not been put on the market.

I have posted about shadow inventory before:

http://tradersutra.blogspot.com/2009/09/shadow-inventory-rising.html

The coming supply of foreclosed homes is usually called a wave. This wave has slowed of late so its difficult to measure, but if anyone thinks housing prices are going to rise better look else where.