AbeGates.com

Case-Shiller Posts 16th Straight Month Of Home Price Improvement

abegates — Wed, 01 Sep 2010 12:51:18 +0000

According to the Standard & Poors Case-Shiller Index, home values rose 5 percent in June versus the month prior, and 4 percent from a year earlier. It’s the 16th consecutive month in which Case-Shiller reported an increase in home values and the third straight month of outstanding results.

That said, homeowners and home buyers in Seattle would do well to temper Case-Shiller enthusiasm. The June figures are issued on 60-day delay and, over the last 60 days, housing data has been lackluster at best.

Existing Home Sales are down 27 percent
New Home Sales are down 12 percent
Homebuilder confidence is down

According to the report prices were flat in Seattle from May to June and down 1.8 percent from a year ago. Seattle historically lags the national housing trends.

Stories like these highlight a key weakness of the Case-Shiller Index — it’s out of date as soon as it’s published. Because of this, the Case-Shiller Index relevance to everyday Americans is muted. People don’t buy homes in the “60 days ago” real estate market, after all.

June is ancient real estate history.

However, the Case-Shiller Index does have its place. As the most widely-followed, private-sector housing tracker, the index is used to help make policy decisions and to shape Wall Street’s expectations of the economy. This means that a strong Case-Shiller reading can cause mortgage rates to rise, and a weak Case-Shiller reading can cause rates to fall.

Tuesday, mortgage rates fell.

This Week’s Market Update

abegates — Mon, 30 Aug 2010 14:26:51 +0000

Last Week in Review

“It all depends on how we look at things.” Those words by Carl Jung describe the importance of perspective… which is exactly what last week’s economic reports on home sales require! Existing Home Sales were reported well below expectations and a significant 27% decline from last month. As you can see in the chart below, New Home Sales were also ugly - coming in well below expectations and at the lowest reading on record. But as Carl Jung said, let’s take a step back and gain a wider perspective about how we look at those reports… and what they mean!With all due respect, the actions from the Washington academics are invariably filled with unintended negative consequences. The First Time Homebuyer Tax Credit is a good example. It’s now clear that the tax credit has done more harm than good…all at an enormous cost to those who pay taxes. Here’s why: The tax credit simply rewarded those who were already going to purchase homes, as well as those who moved up the timing of an inevitable purchase. But now… the “sugar rush” is over, and the void remains. Worse yet, potential buyers are feeling reticent to make a move after “missing out” on the free money. The obvious problem that remains within our faltering economy is the job market. Yet the focus from Washington has been elsewhere. And it can be argued that each landmark passage of reforms - from aviation to healthcare to financial - has made job creations more challenging.

But eventually we expect some better decisions to come out of Washington. This, along with time, will help the housing market and overall economy recover - making for a good long-term buying opportunity in today’s market. Remember, the best investors buy during the most pessimistic times.

To highlight this - as well as give us better perspective and some hope towards the future - here’s something that was recently pointed out by Dennis Gartman, a well-respected market analyst. Back in 1992, an article in Time Magazine included this passage:

“The US economy remains almost comatose. The slump already ranks as the longest period of sustained weakness since the Depression. The economy is staggering under many ‘structural’ burdens, as opposed to familiar ‘cyclical’ problems. The structural faults represent once-in-a-lifetime dislocations that will take years to work out. Among them: the job drought, the debt hangover, the banking collapse, the real estate depression, the health care cost explosion and the runaway federal deficit.”

It’s amazing how eerily similar the picture from 1992 compares to today. We all know that the period following 1992 included terrific growth and opportunities in the economy, stock market and housing. If history repeats itself, which it often does, this could point to much better days in the future with opportunities in the present.
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New Home Sales Hit a Record Low in July 2010

Speaking of revisiting the past… back in 1985, the Kansas City Royals faced the St. Louis Cardinals in the World Series. This was known as the “I-70 Showdown” World Series, as I-70 is the route that connects both cities, and the road along which fans traveled between both stadiums. Lately, there’s been another I-70 Showdown, between Kansas City Fed President Thomas Hoenig and St. Louis Fed President James Bullard. And interestingly enough, both Fed Presidents spoke at the ongoing Jackson Hole Symposium, which was hosted last week by the Kansas City Fed. Hoenig kicked off things with his opening speech Thursday night. While he has clearly been the most vocal Fed inflation hawk - calling for an increase in the Fed Funds Rate to at least 1% ASAP to prevent future inflation - his opening remarks were mellow.

The next morning, it was St. Louis Fed President Bullard’s turn at the plate. While Bullard has been quite the inflation dove of late - calling for the Fed to do more to prevent deflation - his remarks were rather surprising. He stated that he doesn’t see a double dip recession, despite the economy being a bit softer. He further commented that he expects reasonable growth during the second half of this year and for the economy to be back on track during 2011. Those are pretty positive comments from a man who actually went right from stage to an appearance on CNBC, where he went on to state his most surprising comment, which was that the Fed has done as much as they will do for the Mortgage Backed Securities (MBS) market.

The main event came when Fed Chair Ben Bernanke was up. In his comments Friday morning, he appeared to dismiss the deflation scenario, stating it wasn’t much of a risk as the Fed has the tools to combat deflation. Those tools include more purchases of longer-term securities - and when you take this comment along with what Bullard said previously about MBS, it looks like the Fed may lean their purchases towards longer term Treasuries. This incestuous relationship between the Fed and the Treasury gives the US a license to print money at low rates, which will almost certainly end with an inflation problem down the road.

Another tool would be lowering the interest paid on excess reserves, which may influence banks to lend out that money; however, much like pushing on a string, this has been difficult to do.

A final tool would be signaling that the Fed will keep short-term interest rates close to zero for longer than what the market currently expects, or for an “extended period.” Some are looking for the Fed to give clarity as to when they’ll look to raise rates, such as an unemployment rate that dips to “x” level. But the Fed does not appear to want to be handcuffed to such a trigger, as economic circumstances contain so many moving parts.

LOOKING FORWARD TO THIS COMING WEEKEND, THE LABOR DAY HOLIDAY IS ALREADY UPON US. THAT MEANS SUMMER IS QUICKLY COMING TO AN END, BUT THERE’S STILL TIME TO TAKE A WELL-DESERVED, LAST-MINUTE VACATION. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW BELOW FOR TRAVEL TIPS THAT CAN HELP YOU GET AWAY YET THIS SUMMER.

Forecast for the Week

This week, we’ll get a read on the consumer perspective of the economy, with reports on Personal Incomeand Personal SpendingMonday as well as the Personal Consumption Expenditure (PCE) Index, which is the Fed’s favorite gauge of inflation. Those reports will be followed by a report on Consumer Confidenceon Tuesday.
Manufacturing will also be in the news Tuesday with the Chicago PMI, which surveys more than 200 Chicago purchasing managers about the manufacturing industry and is a good indicator of overall economic activity. The ISM Indexis due out the day after that. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector.
We’ll also see the first employment report of the week on Wednesday morning with the ADP National Employment Report, which comes just a day before the Initial Jobless Claimsreport on Thursday. Initial Jobless Claims fell 31,000 in the latest week to 473,000, below the expected 485,000. And while that is still bad, at least for one week it broke a bad trend of consecutively higher readings.
But the big news of the week is expected on Friday, when the Labor Department releases the official Jobs Reportfor August. With so much of the economy in a holding pattern because of unemployment concerns, the markets will definitely be paying attention to this report.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.As you can see from the chart below, Mortgage Bonds weren’t able to close above resistance last week.
Overall, Bonds and home loan rates ended the week near where they began, which is at historically great levels for homebuyers or homeowners looking to refinance. If you’re curious how you or someone you know can benefit from these levels, please contact me today to discuss your unique situation.———————–
Chart: Fannie Mae 3.5% Mortgage Bond (Friday, August 27, 2010)

Have a great week and let us know when we can be of help. — abe

New Home Sales Drop In July — Just Like Existing Home Sales

abegates — Thu, 26 Aug 2010 12:52:38 +0000

One day after the National Association of Realtors released the softest Existing Home Sales report since 1995, the U.S. Census Bureau released a similarly-weak New Home Sales report.

Americans bought just 276,000 newly-built homes in July. That marks the fewest units sold since the government started keeping records in 1963.

In addition, although new home inventory actually dropped 2,000 units in July, the slowing sales pace still managed to push the national supply higher by 1.1 months. At July’s rate of sales, the nation’s new home inventory would be exhausted in just about 9 months.

None of this news should surprise you, though. It’s all been foreshadowed for weeks.

First, Single-Family Housing Starts have dropped in every month since April. A “housing start” is a when a home starts construction and, because fewer homes are under construction, we should expect fewer homes to be sold.

Second, Building Permits are down. The number of new permits peaked in March and have fallen 23 percent since.

And, lastly, home builder confidence ranks at its lowest levels since early-2009. A contributing factor in that pessimism is dwindling buyer foot traffic.

Regardless, there’s two sides to the story. Although the New Home Sales data looks bad for builders, it can be terrific for you. This is because new homes are more likely to be discounted when the sales cycle favors buyers.

Coupled with ultra-low mortgage rates, the cost of buying a newly-built home in Seattle may have just become cheaper.

Bank Mortgage Lending Policies Appear To be Easing

abegates — Tue, 24 Aug 2010 12:53:29 +0000

The tightening in mortgage-lending policies that characterized the last 3 years appears to be slowing.

According to the Federal Reserve’s quarterly survey of senior bank loan officers, roughly 1 in 10 lenders added mortgage qualification hurdles between April and June. It’s a huge departure from just 2 years ago when the mortgage industry was facing its first wave of challenges.

During that period, eight in 10 lenders added hurdles.

For mortgage applicants in Seattle , this quarter’s Fed survey results signals that mortgage lending may have reached its limits of restriction and lenders are getting a better handle on what the agencies (Fannie, Freddie and FHA) are requiring. A lot of the problems come with the lenders not understanding completely the changes that agencies have made and what they expect.

I know here at Sterling we have recently added new portfolio loan programs with more to come.

Since 2007, mortgage guidelines have become increasingly restrictive. There’s extra scrutiny on assets and tax returns; employment history is given more weight; loan purpose matters. There’s a bevy of traits that can stand between you and an approval that didn’t exist a few years ago.

That said, lots of homeowners are still getting loans.

Verifiable income, good credit scores and equity are the “magic formula” and banks want to lend to good credit risks. And the best news for those that qualify is that mortgage rates are fantastic right now.

According to Freddie Mac, mortgage rates are as low as they’ve been in history.

So, if you’re among the many wondering if now is the right time to buy a home — or refinance one — remember that, although mortgage guidelines likely won’t get worse, mortgage rates probably will.

This Week’s Market Update

abegates — Mon, 23 Aug 2010 14:11:52 +0000

Last Week in Review

“There is nothing wrong with change, if it is in the right direction.” Winston Churchill. And certainly, seeing our economy improve is change in the right direction. But what steps will get us there… and how will those steps impact home loan rates. Here’s what you need to know.

Last Tuesday, the government held a “Future of Housing Finance” conference to discuss changes needed in this area. Most participants agreed that government assistance for housing must be reduced but not eliminated. Bill Gross, from PIMCO and one of the panelists, called for a massive refinancing of certain mortgages backed by Fannie/Freddie/FHA, believing such a move would lift home prices 5% to 10% and provide a $50 Billion stimulus to the economy. I will be watching this situation closely for further developments.

Home sales and the job market - two key aspects to our continued recovery - are also areas we need to see change in an improving direction. Last week, the NAHB Housing Market Index came in a bit worse than expectations and showed housing to be at a 17-month low. It can be argued that the tax credits actually hurt the housing market by not adding any sales, just pushing them up. This has now resulted in a void or softer period in the market, potentially wasting billions of dollars. Housing Starts and Building Permits were also reported lower than expected last week. Clearly, demand for housing has slowed over the past few months, due to the expiration of the Home Buyer Tax Credit and persistently high unemployment.

Speaking of unemployment, awful is the only way to describe last week’s Initial Jobless Claims report. According to the report, 500,000 people filed to receive unemployment benefits for the first time, which was well higher than the lofty 475,000 expected and the highest reading since November 2009. In addition, between Continuing Claims and people receiving Emergency Unemployment Compensation or EUC, the combined total of people receiving unemployment benefits now equals 9.25 Million people.
The bottom line is this: The labor market is the foundation of our economy. Job growth and confidence is the best and most sustainable way for our economy to recover. The present anti-business regulatory environment is pushing Initial Claims, a leading indicator on the health of the labor market, in the wrong direction.

But home loan rates, meanwhile, continue to remain at historic low levels. Though keep in mind, inflation is the arch enemy of Bonds and home loan rates, which means it can cause both to worsen. Both the Producer Price Index (which measures inflation at the wholesale level) and the Consumer Price Index were recently reported hotter than expected. If rates do start to rise, they will likely do so quickly.
If you or anyone you know would like to learn more about taking advantage of historically low home loan rates, please don’t hesitate to call or email. Or forward this newsletter on to anyone you think may benefit and I’d be happy to talk to them free of charge.
WHEN YOU’RE BUYING A HOUSE, THE LAST THING YOU WANT IS AN UNSUCCESSFUL CLOSING. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW FOR SOME INFORMATION THAT WILL HELP ENSURE YOUR HOMEBUYING EXPERIENCE MOVES IN THE RIGHT DIRECTION.

Forecast for the Week

More housing and job news follows this week, but will there be change in an improving direction? We’ll find out with Tuesday’s Existing Home Sales Report, Wednesday’s New Home Sales Report, and Thursday’s Initial and Continuing Jobless Claims Report.

Also, on Wednesday we’ll get a read on the health of the economy with the Durable Goods Report, which gives us an update on consumer and business buying behavior on big-ticket items that last for an extended period of time. Meanwhile, Friday will bring another read on the economy with the Gross Domestic Product Report, which is the broadest measure of economic activity.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

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The Mortgage Market Guide View…

Credit Reports: One May Not Be Enough
This summer, Fannie Mae instructed lenders that they should adopt a new policy that would include a second review of an applicant’s credit report just prior to closing. Why? The answer is simple: the credit profile of a borrower may have changed between the time of the initial review of the credit report and the time of closing.
How will this impact the home loan?
The potential impact to a borrower who has utilized credit to make significant purchases after the initial credit report could include:

A delay in closing
Increase of closing costs and/or interest rate
A decreased loan amount
Denial of the loan

That’s right, in the worst-case scenario, a change in credit could even result in a loan being denied - even after an original approval had been granted.
What should homebuyers do (or not do)?
In order to eliminate any possibility of potential problems before closing, anyone in the application process should use credit sparingly and make sure they adhere to the tips provided below by credit expert Linda Ferrari of Credit Resource Corp:

Don’t do anything that causes a red flag to be raised by the scoring system.
Don’t apply for new credit of any kind.
Don’t pay off collections or charge offs.
Don’t max out or over charge on your credit accounts.
Don’t consolidate debt onto one or two credit cards.

This list is not comprehensive, but it does give you a peek into situations that could create issues and could also be contrary to some ideas you have read previously.

The Talent Code

abegates — Fri, 20 Aug 2010 14:19:20 +0000

Last weekend I participated in a workshop in Portland that was put on by The Taylor Group, the coaching company that I work with. They had us read a chapter from the book The Talent Code. It was fascinating! I downloaded the book and i’ve been listening to it while running and walking to work. The author Daniel Coyle visits nine talent hotbeds and makes some very interesting discoveries.

From the book’s website:

What is the secret of getting really good at something? How do we unlock it?

Journalist and New York Times bestselling author Daniel Coyle visited nine of the world’s greatest talent hotbeds — tiny places that produce huge amounts of talent, from a small music camp in upstate New York to an elementary school in California to the baseball fields of the Caribbean.

He found that there’s a pattern common to all of them — certain methods of training, motivation, and coaching. This pattern, which has to do with the fundamental mechanisms through which the brain acquires skill, gives us a new way to think about talent — as well as new tools with which we can unlock our own talents and those of our kids.

Closing Costs — Where do you live?

abegates — Thu, 19 Aug 2010 12:53:25 +0000

How much does a mortgage cost? The answer depends on where you live. But no matter which your locale, chances are strong that you’ll pay more for a mortgage in 2010 as compared to 2009.

According to Bankrate.com and its annual Closing Cost Survey, a typical $200,000, purchase mortgage now carries an average $3,741 in closing costs — up nearly 37 percent from last year.

As defined by Bankrate.com, “closing costs” is defined as the sum of two numbers. The first group is labeled “origination charges”, a category that includes such items as underwriting fees, application fees and processing fees. These fees are paid directly to the loan originator’s company at the time of closing.

The second grouping of costs is labeled “third-party fees”. Third-party fees include appraisals, credit reports, settlement fees and title searches — items paid in connection with the loan, but not paid to the lending bank or broker.

It’s unclear why closing costs appear to have escalated into 2010, but Bankrate.com suggest that recently-enacted federal lending laws are a culprit:

The new law requires loan officers to be accountable to a Good Faith Estimate’s accuracy. Bankrate.com’s prior-year surveys may have been “understated”, therefore, because of a lack of accountability.
The cost of federal compliance is high, and banks may be passing on compliance costs to consumers

To see the complete list of closing costs by state, including where Washington ranks, visit the Bankrate.com website.

This Week’s Market Update

abegates — Mon, 16 Aug 2010 13:44:00 +0000

Last Week in Review :

“The great thing in the world is not so much where we stand as in what direction we are moving.”Last week, the financial markets appeared to agree with Oliver Wendell Holmes’ words by looking for some more direction from the Fed after its FOMC Meeting.
While the Fed didn’t say much, they did state that Mortgage Bond holding income and proceeds would be reinvested into Treasuries. This helps the Treasury continue to pump out debt at low rates. But this relationship is a concern to the Stock market, as there is no doubt that this will lead to further problems down the road. In addition to “kicking the can,” the Fed did not provide a game plan on how it could handle deflation, a Japanese type economy, or longer-term inflation. This uncertainty is something that the Stock market hates. As a result, investors pushed Stock prices significantly lower in early trading Thursday - and the cash sale proceeds from Stocks found their way into Bonds.

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Markets Wanted More Direction from the Fed

In other news last week, the Labor Department reported that preliminary Productivity for the 2nd Quarter came in at -0.9%, which was below the 0.1% rise expected…and quite a bit lower from the 3.9% reading for the 1st Quarter. The decline in Productivity was actually the first negative reading since the 4th quarter of 2008. The slowdown in productivity is interesting, as higher productivity does many things. It keeps operating costs lower, lessens the need for hiring, and works to keep prices down. So this unexpectedly weak number, should it become a trend, may work to ease some of the deflation fears and, ironically, could help the labor markets.
Speaking of labor, last week’s Initial Jobless Claims report showed 484,000 people signing up for first-time unemployment benefits. That number was worse than expectations of 465,000 and the highest reading since February’s 498,000. No matter how you slice it, this is a horrible number… and it highlights that the most important element of any real-life economic recovery is still struggling.
According to the report, Continuing Jobless Claims did fall, but that number can be deceiving since the decrease has nothing to do with an improvement in the labor market. In actuality, the decrease in Continuing Claims, which lasts for the first 26 weeks of unemployment, is due to the benefit expiring - and those individuals rolling into the Emergency Unemployment Compensation benefit category. And in that category, due to the recently passed unemployment benefits extension, those collecting Emergency Unemployment Compensation, spiked a whopping, almost incomprehensible, staggering, shocking, (fill in your own favorite descriptor here) 1.2 Million from the prior week to 4.5 Million… and yet the majority of the media overlooked the real facts or were unwilling to report them.
FUTURE EMPLOYMENT MAY BE ON THE MINDS OF TODAY’S COLLEGE STUDENTS, BUT THE MORE IMMEDIATE CONCERN SHOULD BE ON HOW TO BEST MANAGE THE FINANCIAL TESTS THEY’LL FACE WHEN THEY’RE ON THEIR OWN. CHECK OUT THE MORTGAGE MARKET GUIDE VIEW BELOW FOR 5 FINANCIAL LESSONS EVERY COLLEGE STUDENT SHOULD LEARN BEFORE HEADING TO SCHOOL.

Forecast for the Week:

This week, we’ll see a number of reports that have the potential to move the markets. We’ll start off with a dose of manufacturing news right away Monday morning with the Empire State Index, which looks at New York State’s manufacturing sector, including how busy it is and where things are headed. On Thursday, we’ll also see the Philadelphia Fed Index, which is one of the most important regional manufacturing indices. These two reports will provide an early look at the manufacturing sector for the month of August.
Things kick into full swing on Tuesday with a number of important reports, including the Producer Price Index (PPI), which measures inflation at the wholesale level. Remember, inflation is the archenemy of Bonds and home loan rates, so it will be important to see what this report reveals. The PPI report comes just after the Consumer Price Index was released last week showing the highest headline reading in a year, so the markets will definitely be paying attention to this report. We’ll also see reports on Industrial Productionand on Capacity Utilization, which is considered a telling inflation indicator.
Tuesday also brings another dose of news on the health of the housing industry with reports on the number of Housing Startsand Building Permitsin July. Housing Starts for June came in below expectations and at the lowest level in 8 months. And even though Building Permits showed an uptick, it was primarily in the multi-family area rather than in the more important and widely watched single-family area, which showed the lowest permits since April 2009. I’ll be watching to see if those numbers improve for July.
Finally, the week of reports caps off on Thursday with the weekly Initial Jobless Claimsreport. As discussed above, last week’s report was disappointing to say the least.
In addition to those reports, the Treasury Department and White House will be hosting a “Conference on the Future of Housing Finance”next Tuesday where the future of Fannie Mae and Freddie Mac will be discussed. You may recall a couple weeks ago, rumors were swirling of a major bailout to help millions of homeowners who are upside down on their mortgages - and some pointed to this conference as the venue to release such a big announcement. So I’ll be keeping a close eye on this conference and how it impacts homeowners.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.As you can see from the chart below, Mortgage Bonds have continued to climb a staircase higher. Overall, Bonds and home loan rates ended last week where they began - which is at historically good levels.
If you or someone you know has been thinking about purchasing or refinancing a home, now is an ideal time. Even if you’re not sure what you want to do, a brief conversation can provide you with the information you need to make an informed decision.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday, August 13, 2010)

Have a great week and let us know if there is anything we can do to help. — abe

Higher (And Lower) FHA Mortgage Insurance Premiums Start October 4, 2010

abegates — Fri, 13 Aug 2010 12:53:30 +0000

For the second time this year, the FHA is modifying mortgage insurance.

Beginning with FHA case numbers issued on or after October 4, 2010, the FHA is changing its upfront and annual mortgage insurance premium structure.

Under the new terms, assuming a 30-year fixed rate FHA mortgage with at least 5 percent equity:

Upfront MIP drops to 1.000% of the amount borrowed from 2.250%
Annual MIP increases to 0.850% of the amount borrowed from 0.500%

For homeowners in Seattle and everywhere else , this switch in MIP decreases the upfront cost of an FHA-insured mortgage, but increases the loan’s long-term costs.

Using a $100,000 mortgage as an example, upfront MIP falls to $1,000 from $2,250; monthly MIP jumps to $70.83 from $41.67. The FHA expects the change will yield an additional $300 million in premiums monthly.

The update is a huge win for the FHA whose reserve funds are self-proclaimed to be “perilously low”. The extra monies should help recapitalize and stabilize the government group.

The FHA is on pace to back 1.7 million loans this year.

For the majority of refinancing FHA homeowners and home buyers, the MIP change is neither good nor bad — the borrowing landscape will just looks a bit different. Yes, loans will cost more to carry each month, but also they’ll be less expensive to procure. It’s a trade-off and you can apply math formulas to solve for the best time to apply FHA.

It may be wise to get your FHA case number before October 4, for example, depending on your time frame in the home and the expected life of the mortgage. Or, it may be better to wait until after October 4 to apply.

If you’re unsure of how the new FHA mortgage premiums will impact your mortgage, be sure to call or email your loan officer for help.

NOTE : The FHA originally announced an implementation date of September 7. It was subsequently amended to October 4, 2010.

How Big Is The Foreclosure Market? It Depends On Where You Live, Of Course.

abegates — Thu, 12 Aug 2010 12:54:27 +0000

Foreclosure filings rose 4 percent nationwide last month versus June, according to foreclosure-tracking firm RealtyTrac.com. For the 17th straight month, total filings topped 300,000.

A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

As with most months, just a handful of states dominated foreclosure activity nationwide.

California : 14.9 percent of all activity
Florida : 11.6 percent of all activity
Arizona : 6.4 percent of all activity
Michigan : 6.2 percent of all activity
Georgia : 6.1 percent of all activity
Texas : 4.9 percent of all activity

Together, these 6 states represent just 30 percent of the overall U.S. population.

The other 44 states (and Washington D.C.) were home to the remaining 49.0%.

Despite this imbalance, though, in all markets, foreclosures and REO are making a profound impact on pricing and product. “Distressed” homes now represent 32 percent of the overall resale market nationwide, according to the National Association of Realtors®.

Buying a foreclosed home can make for a terrific “deal”, but buying in the REO market is decidedly different from buying a non-foreclosed property.

As 3 examples:

Buying bank-owned homes can take 120 days to close.
Foreclosures aren’t always listed for sale publicly. Some inventory is privately-held.
Bank-owned homes are often sold “as is”. There may be defects that render the homes mortgage-ineligible.

If you have an interest in buying REO, consider talking with a real estate agent first. Even the negotiation process is different as compared to a non-distressed sale. It helps to have an experienced professional representing your interests.